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.








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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  








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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