BILL ANALYSIS Ó
AB 1899
Page 1
ASSEMBLY THIRD READING
AB
1899 (Calderon)
As Amended March 16, 2016
Majority vote
------------------------------------------------------------------
|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Insurance |13-0 |Daly, Melendez, | |
| | |Travis Allen, | |
| | |Bigelow, Calderon, | |
| | |Chu, Cooley, Cooper, | |
| | |Dababneh, Dahle, | |
| | |Frazier, Gatto, | |
| | |Rodriguez | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |19-1 |Gonzalez, Bigelow, |Gallagher |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Holden, Jones, | |
AB 1899
Page 2
| | |Obernolte, Quirk, | |
| | |Santiago, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
------------------------------------------------------------------
SUMMARY: Requires the Department of Insurance (DOI) to provide
the license examinations for life, life-only, and accident and
health agents in Spanish.
EXISTING LAW:
1)Requires insurance agents to be licensed by the DOI and
requires that an applicant pass a written examination to
become licensed.
2)Establishes a variety of agent license categories based on the
nature of the products the agent will be selling.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)Costs to DOI of approximately $230,000 in Fiscal Year 2017-18
to translate the materials into Spanish, including
psychometric testing, and for initial staffing costs
(Insurance Fund).
2)Depending on the increased number of exams administered and
licenses issued, the department would also incur additional
costs and collect additional revenues, depending on the growth
in the number of exams. The examination fee is $50 and
AB 1899
Page 3
license fees are $170 biennially.
COMMENTS:
1)Purpose. According to the author, existing law does not
require an examination for a license as a life-agent,
life-only agent, or accident and health to be provided in
Spanish. Because a plurality of Californians are Latino, a
significant portion this population speaking only Spanish,
offering the opportunity for Spanish speakers to take the
licensing exam will increase the number of agents able to
serve Spanish speaking consumers. It is important for
California to have agents who are better able to serve these
communities. Spanish speakers serving these communities will
help prevent miscommunication and potential fraud during the
sales process.
2)Demographics. The ethnic and linguistic diversity of
California's population presents many communication
challenges. The challenges are particularly acute in the
insurance industry which has complex products that are hard to
understand even for native English speakers. Estimates from
the 2014 American Community Survey (ACS) indicate that over
one-half Californians report their ethnicity as either Latino
(38.6%) or Asian (13.7%). The ACS data also indicates that
22% of households where Spanish is spoken have no one over 14
who speaks English fluently or "very well." For households
where an Asian language is spoken, 28% do not have a member
over 14 who speaks English fluently or "very well."
3)License Examinations. California residents who want to apply
for an insurance producer (agent or broker) license issued by
DOI must first pass a qualifying license examination. There
are 10 examinations for specific insurance producer licenses.
Presently, all examinations are offered only in the English
language. Candidates with disabilities or those who would
otherwise have difficulty taking the examination (including a
AB 1899
Page 4
language barrier) may, prior to the examination, request a
special accommodation. Special accommodation requests for ESL
require the candidate to provide a personal letter requesting
the accommodation and a letter from the candidate's English
instructor or sponsoring company, certifying that English is
not their primary language. Candidates satisfying these
requirements will be provided an additional 30 minutes on
their license examination.
4)Other States. Some states offer examinations for insurance
producer licenses in Spanish: New York (since 2004), Texas
(since 2005) and Florida (since 2013). New Jersey will offer
Spanish versions of their insurance producer license
examinations later this year. The states who have offered the
exam in Spanish have seen dramatically different pass rates
between the English and Spanish language versions of the
examinations. In Calendar Year (CY) 2014, New York reported a
42% first-time pass rate for the English version of the Life
Agent examination compared with a 13% first-time pass rate for
the Spanish version of the same examination. Similarly, for
CY 2015, Texas reported a 57% first-time pass rate for the
English version of the Life Agent examination compared with a
24% first-time pass rate for the Spanish version of the same
examination. Finally, for CY 2015, Florida reported a 65%
first-time pass rate for the English version of the Life Agent
examination compared with a 25 percent first-time pass rate
for the Spanish version of the same examination.
5)Psychometrics. Professional licensing examinations are a
substantial governmental barrier for someone seeking to enter
a profession, and, accordingly, the government is required to
meet rigorous standards to assure that an examination is a
fair measure of the knowledge, skills, and abilities (KSAs)
required to practice a profession. The examinations are
developed and updated by periodic surveys of licensed
professionals to determine what KSAs are used in their daily
work. The results of those surveys are then compiled and
AB 1899
Page 5
analyzed and substantially determine what subjects will be
covered in the test (generally known as the content outline).
Individual examination items are developed by practicing
professionals (subject matter experts or SMEs) to test each
KSA, and those items are then tested to determine if they are
fair questions or if they need to be modified. Once the
questions are final, they are assembled into a test (known as
a "form") that matches the content outline. Typically, a
licensing exam will have multiple forms each with some
overlapping and some unique items. Having multiple forms
helps to prevent particular items from becoming known through
overuse and helps to thwart efforts to "steal" exam questions.
To establish a passing score, the SMEs go through a process to
determine the passing score by assessing how a "minimally
competent, entry level practitioner" would perform on the
test. This process must be repeated for each form of the exam
because some forms are "harder" than others and the passing
scores need to be calibrated to ensure fairness among the
different exam forms. The entire test development process is
informed by statistical analysis and overseen by a
"psychometrician" who is a psychologist credentialed in
psychological measurement and testing.
Tests are necessarily bounded by the language in which they
are written. Making a small change (changing a word or
altering the syntax) in a test item can drastically alter how
any individual item performs. These challenges are multiplied
when developing a test form in another language. Simply
translating an existing form can cause problems because some
concepts do not move easily between languages and even slight
changes in meaning or context can lead to dramatically
different results among similarly situated test takers. Those
"dramatically different results" are the essence of disparate
treatment and threaten the validity of a licensing examination
program.
AB 1899
Page 6
Analysis Prepared by:
Paul Riches / INS. / (916) 319-2086 FN: 0003356