BILL ANALYSIS
AB 2717
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2717 (Skinner) - As Amended: April 7, 2010
SUBJECT : Insurance agents and brokers: senior designations
SUMMARY : Recasts and clarifies the laws that govern the
procedures and criteria that determine the titles or
designations that insurance agents and brokers may use to
describe themselves in connection with the sale of insurance
products to senior citizens. Specifically, this bill :
1)Specifies the procedures that an applicant for approval of a
senior designation must use, and authorizes the Insurance
Commissioner (IC) to reject an incomplete application.
2)Requires the IC to approve an application within 90 days,
unless it is determined that investigation into the applicant
is necessary.
3)Provides that, if after investigation the IC refers the
application for further legal proceedings, a written statement
of issues is required within 45 days of the completion of the
investigation.
4)Requires an organization that confers a senior designation to
notify the IC within 45 days of any material changes to the
information that was provided in the application.
5)Clarifies the accreditation requirements for private entities
that issue designations.
6)Establishes the topics that must be taught in the required 75
hours of education necessary for a training program to qualify
to issue senior designations.
7)Establishes the conditions under which an organization that
does not otherwise meet the eligibility criteria may
nonetheless be approved to confer a senior designation.
8)Specifies the minimum standards and procedures an organization
must have concerning discipline of people on whom it has
conferred a senior designation.
AB 2717
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9)Clarifies the types of insurance to which the rules governing
senior designations apply.
10)Authorizes the IC to issue a letter, in response to a
petition, to an organization seeking exemption from the
approval requirement, where the use of the title or
designation concerns matters unrelated to the sale of
insurance to seniors.
11)Repeals redundant continuing education requirements.
12)Repeals provisions inconsistent with the redrafted and
clarified rules, above.
13)Repeals obsolete language relevant only during the initial
phase-in of the senior designation law.
EXISTING LAW :
1)Prohibits the use of a "senior designation" in connection with
the sale of insurance to senior citizens, unless the
designation has been approved by the IC.
2)Defines "senior designation" as any degree, title, credential,
certificate, certification, accreditation, or approval that
expresses or implies that an insurance agent or broker
possesses expertise, training, competence, honesty, or
reliability with regard to advising seniors on finance,
insurance, or risk management.
3)Requires that an agent or broker have been licensed in a
United States jurisdiction for at least four years before
using a senior designation.
FISCAL EFFECT : Undetermined
COMMENTS :
1)Purpose . According to the author, the purpose of this bill is
to clarifiy the laws that govern the procedures and criteria
that determine the titles or designations that insurance
agents and brokers may use to describe themselves in
connection with the sale of insurance products to senior
AB 2717
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citizens to make them easier for the IC to implement and for
insurance agents and brokers to comply with.
2)Background . According to the author, this bill is intended to
enact modifications to the senior designation statute the have
been identified as the IC has gone through the process of
attempting to implement this law. The bill contains changes
to the existing statute, and the addition of language that
would otherwise have to be adopted by regulation. Existing
law fails to provide sufficient detail to enable the IC to
efficiently and effectively implement the senior designations
law in a manner that is reasonable for both the IC and the
insurance agents and brokers seeking to use designations. By
incorporating all of these changes in one bill, the
implementation of this program can proceed more efficiently
and effectively.
3)Prior legislation . AB 2150 (Berg) of 2008 (Statutes 2008,
chapter 327) enacted the law that restricts the use of senior
designations. According to the Assembly Insurance Committee
analysis of AB 2150, former Assemblymember Berg introduced the
bill to address "unscrupulous sales people who convince older
adults to obtain annuities or other financial products
inappropriate to their circumstances often using misleading
designations as a way of gaining trust, and giving the
impression that they have special knowledge that will allow
them to help protect assets that they actually intend to
plunder."
4)Need to clarify how qualified individuals must be to obtain a
designation . The basic educational requirement in both
current law and in the bill essentially requires a person to
complete a 75-hour course of study, but little more. The
Department of Insurance (DOI) has been concerned that this is
too low for a person who, as provided in the statute, has "no
prior insurance education or experience." However, the
75-hour figure was part of the AB 2150 negotiations, and this
bill is designed to clarify and improve AB 2150, but not
re-open the overall agreement. The DOI has suggested
compromise language providing that the organizations seeking
approval to issue designations must evaluate their candidates
as demonstrating "superior expertise in advising seniors in
particular in finance, insurance, or risk management by
passing an exam or exams" after completing at least 75 hours
of instruction. The sponsor has agreed to this language (page
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4, lines 28-30) and it is recommended that the author accept
this amendment as an author's amendment when the bill is
heard.
5)Superfluous provisions . There is language in the bill that
both the DOI and the sponsor agree was unintentionally left
from an earlier draft, and should be deleted. The language
appears on page 4, line 37 through page 5, line 6. It is
recommended that the author accept this amendment as an
author's amendment when the bill is heard.
6)Unnecessary strikeout . One of the provisions of AB 2150
listed words that would be deemed a senior designation when
used in connection with other listed terms. One of the listed
words is the word "retire," and the bill proposes to delete
this word from the list. However, there are a number of ways
the word "retire" could be used in connection with the other
listed terms and cause a misleading implication, contrary to
the purposes of the law. It is recommended that the author
accept an author's amendment removing the strikethrough on the
word "retire" where it appears on page 7, line 3.
REGISTERED SUPPORT / OPPOSITION :
Support
National Association of Insurance and Financial Advisers of
California (sponsor)
California Department of Insurance (CDI)
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086