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