BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2717| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 2717 Author: Skinner (D) Amended: 7/15/10 in Senate Vote: 21 SENATE BANKING, FINANCE, AND INS. COMM. : 10-0, 6/30/10 AYES: Calderon, Cogdill, Correa, Florez, Kehoe, Liu, Lowenthal, Padilla, Price, Runner NO VOTE RECORDED: Cox SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 72-0, 5/20/10 - See last page for vote SUBJECT : Insurance agents and brokers: senior designation SOURCE : Author DIGEST : This bill revises standards and procedures that apply to Insurance Commissioner (Commissioner) approval of special senior designations (used by insurance producers in connection with sales of financial and insurance products to seniors) to (1) enhance their credibility, (2) allow strengthened oversight by the Commissioner, and (3) to make designation rules easier for producers to comply with. ANALYSIS : Existing law: 1.Prohibits the use of a "senior designation" in connection CONTINUED AB 2717 Page 2 with the sale of insurance to senior citizens, unless the designation has been approved by the Insurance Commissioner. 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. This bill recasts and clarifies 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 Commissioner may only approve use of a "senior designation" if the organization that issues it satisfies all of the following requirements: ? The organization applies for the designation on a form approved by the Commissioner, provides such supplementary documents and declarations as the Commissioner deems necessary, and complies with a duty to notify the Insurance Commissioner within 45 days of any material changes to the information that was provided in the organization's application for an a senior designation; ? Clarifies the accreditation requirements for private entities that issue designations. 1. Requires the designation to be accredited by the National Commission for Certifying Agencies, or the organization or the designation is accredited by an agency that is on the United States Department of CONTINUED AB 2717 Page 3 Education's list entitled "Accrediting Agencies Recognized for Title IV Purposes" and the agency is established to the satisfaction of the Commissioner that the agency qualified to accredit an organization or designation involved with financial services provided to seniors. 2. Specifies the organization must require California candidates for designation to demonstrate superior expertise in advising seniors in finance, insurance, or risk management through examinations which are based on testing of applicants who, with no prior insurance education or experience, have completed at least 75 hours of study on: ? Aspects of aging; ? Health care coverage; ? Long-term care insurance; ? Financial planning for retirement; ? Investments, estate planning; and ? Ethics. The act specifies textbooks or other study materials may use chapter and subchapter titles that differ from those general topics as long as the essential content is the same. 1. Specifies the organization must maintain a code of ethics for its California designees and must meet minimum standards and procedures for discipline of designees, including, at a minimum: ? A written procedure to receive, log, and conduct a preliminary review of complaints alleging improper, illegal, or unethical conduct. ? Written standards for determining when a complaint warrants further investigation into the merits of the allegations contained therein. ? Written standards and procedures to ensure that, once a complaint is determined to warrant further investigation, the investigation is diligently conducted. CONTINUED AB 2717 Page 4 ? Written standards for determining when to file disciplinary charges based on the results of an investigation. ? Written standards and procedures to ensure due process in the adjudication of disciplinary charges by adjudicators who are fair, knowledgeable, and otherwise qualified. ? Written standards and procedures for the imposition of appropriate sanctions, including, when warranted, revocation of the designation. 1. Specifies the Act's provisions regarding senior designations shall apply to all types of insurance covered by the Article in which this measure will reside, and also to the lines of lines of Medicare supplement insurance, as defined, and long-term care insurance, to which would otherwise be excepted. 2. Authorizes the Commissioner to confirm by a letter in writing that an organization's designation is exempt from this act, following the receipt by the Commissioner of a petition requesting such a confirmation, where the designation, according to its title or curriculum, or in its actual use, concerns almost exclusively subject matters other than insurance or financial services sold to seniors in particular. 3. Provides the Commissioner may rescind approval of a designation whenever there has been a material change in the management or operation of the organization that issues the designation, or in the procedures or criteria for issuance of the designation, such that if the organization were to apply for approval of the designation subsequent to the change, approval would be denied and provides any rescission shall be after notice and a hearing conducted in accordance with existing law applicable to loss of a license. 4. Repeals redundant continuing education requirements. 5. Repeals provisions inconsistent with the redrafted and CONTINUED AB 2717 Page 5 clarified rules, above. 6. Repeals obsolete language relevant only during the initial phase-in of the senior designation law. Prior Legislation AB 2150 (Berg), Chapter 327, Statutes of 2008, 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." FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/3/10) Department of Insurance National Association of Insurance and Financial Advisors ARGUMENTS IN SUPPORT : According to the author's office, this bill is intended to modify the senior designation statute to address practical issues encountered as the Insurance Commissioner implemented current law. The bill makes extensive changes to the existing statute, and adds significant new provisions. According to the Department and the National Association of Insurance and Financial Advisors, which has contributed its expertise to deliberations on this measure, current law fails to provide sufficient detail to enable the Commissioner to efficiently and effectively implement the senior designations law in an efficient and non-burdensome manner. ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, CONTINUED AB 2717 Page 6 Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De Leon, DeVore, Emmerson, Eng, Feuer, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nestande, Niello, Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Yamada NO VOTE RECORDED: De La Torre, Evans, Fletcher, Harkey, Nava, Villines, John A. Perez, Vacancy JA:nl 8/3/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED