BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2717|
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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
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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
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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.
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? 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
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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,
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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
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