BILL ANALYSIS Ó
SENATE COMMITTEE ON INSURANCE
Senator Richard Roth, Chair
2015 - 2016 Regular
Bill No: AB 1899 Hearing Date: June 22,
2016
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|Author: |Calderon |
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|Version: |March 16, 2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Hugh Slayden |
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Subject: Insurance: production agents: license examinations
SUMMARY Requires the California Department of Insurance (CDI) to
provide the license examinations for life, life-only, and
accident and health licencees in Spanish.
DIGEST
Existing law
1. Requires insurance agents and brokers (collectively
referred to as "producers") to be licensed by CDI and
requires that applicants pass a written examination to
become licensed.
2. Establishes categories of "life licensee" that transact certain
lines of insurance.
a. Accident and health licensees may transact health,
disability, credit disability, 24-hour care, and long-term
care (with additional training).
b. Life-only licensees may transact life insurance, including
endowments and annuities, and may include accidental death or
dismemberment and disability income insurance.
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c. Limited life-only licensees may only transact specific
life insurance policies or annuities that pay benefits in an
amount of no more than $20,000 and are designated for the
payment of funeral and burial expenses.
1. Provides that an applicant may take a single exam to be
licensed as a life-only and accident and health licensee.
2. Authorizes CDI to approve insurance policies in a language
other than English provided that the policyholder is given a
copy of the English version and a disclosure that the English
version is the official version and the translated version is
for informational purposes only.
3. Treats a knowing misrepresentation of information provided in a
language other than English as an unfair trade practice and
subject to special penalties.
This bill Requires CDI to provide the license examinations for
life, life-only, and accident and health licensees in Spanish.
COMMENTS
1. Purpose of the bill According to the author, existing law
does not allow for an examination for a license as a life,
life-only, and accident and health producer to be provided
in Spanish. California residents who want to apply for an
insurance producer license issued by CDI must first pass a
qualifying license examination. There are 10 examinations
for specific insurance producer licenses. All examinations
are offered only in English. Because a plurality of
Californians are Latino and a significant portion of this
population speaks only Spanish, offering the opportunity for
Spanish speakers to take these licensing exams will increase
the number of producers able to serve Spanish speaking
consumers. The ethnic and linguistic diversity of
California's population presents many communication
challenges. The challenges are particularly acute in the
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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
38.6% Californians report their ethnicity as Latino. 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." It is important for California to have
insurance 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. Background California's Constitution of 1849 required that
"All laws, decrees, regulations, and provisions, which from
their nature require publication, shall be published in
English and Spanish." California removed that provision in
1879 when it adopted the current constitution, but has made
some attempts to address the challenges of its own
multilingualism such as the Dymally-Alatorre Bilingual
Services Act. According to the U.S. Census Bureau, about
10.4 million people speak Spanish at home in California.
Given the size of the population, this lack of access would
likely be reflected in California's aggregate insurance
sales. Although California represents about 12% of the
national population, it only represents 8.35% of the
national premium paid to life, accident, and health insurers
(according to data published by the National Association of
Insurance Commissioner).
Examinations. Given that professional licensing
examinations are a substantial barrier for someone seeking
to enter a profession, the government is required to meet
rigorous standards to assure that an examination is a fair
measure of the knowledge, skills, and abilities required to
practice a profession. Although the content of an
examination can fairly easily be translated to another
language, translating examinations so they are useful in
practice as a measure of an individual's skill, knowledge,
and ability is not straightforward. In order to ensure
validity and comparability of results with the original
language, the entire test development process involves
detailed statistical analysis and is overseen by a
psychometrician (a psychologist credentialed in
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psychological measurement and testing) to ensure that the
translation does not inadvertently introduce error or
systematic bias.
Candidates with disabilities or those who would otherwise
have difficulty taking the examination, including applicants
whose do not speak English as their primary language, may
request a special accommodation. Qualified candidates will
be provided an additional 30 minutes.
Other States. Some states already offer examinations for
insurance producer licenses in Spanish. New York offers
examinations for life and accident and health. Texas and
Florida offer life, accident and health, and property and
casualty licenses. There are dramatically different pass
rates between the English and Spanish language versions of
the examinations. In Calendar Year (CY) 2014, New York
reported a 42 percent first-time pass rate for the English
version of the life agent examination compared with a 13
percent first-time pass rate for the Spanish version of the
same examination. Similarly, for CY 2015, Texas reported a
57 percent first-time pass rate for the English version of
the life agent examination compared with a 24 percent
first-time pass rate for the Spanish version. For CY 2015,
Florida reported a 65 percent 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.
Examinations in Spanish for property and casualty licenses
have even lower passing scores.
3. Support Primerica Inc. supports AB 1899 because it will
knock down a barrier to entry and open doors into the
insurance profession for individuals who might otherwise not
apply and bring diversity to an industry that desperately
needs it. Primerica cites a 2013 Survey published in
National Underwriter indicating that just 6 percent of life
agents nationally identify themselves as Hispanic, compared
to 17 percent of the general population. Additionally,
Primerica cites a 2012 Insurance Barometer Study by LIMRA
that found Hispanic households are less likely to own life
insurance than the general population and that a
contributing factor is the that those households are less
likely to have contact with an agent. Primerica states that
offering a Spanish-language licensing exam is one way the
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state can do its part to help ensure agents are available in
all communities.
Several insurance trade associations state that the option
to have the examination administered in Spanish will
decrease potential miscommunication, increase agent
understanding of their duties and obligations, and allow
California to keep pace with the needs of its multilingual
and multicultural insurance consumers.
4. Opposition CDI opposes the bill because permitting an agent
to sell products and policies in English although they took
and passed the Spanish examination does not provide adequate
protection for the agent or the consumer. CDI explains that
there is no evidence stating that simply taking and passing
an examination in Spanish prevents miscommunication or
potential fraud during the sales process. As a result, CDI
has concerns with the bill and proposed amendment to the
author that would the following:
a. Require CDI to establish a pilot program to administer
the examination for life only and life-only limited to the
payment of funeral and burial expenses in English or
Spanish on or after January 1, 2018. The three year pilot
program would have at least six specific evaluation
metrics.
b. Limit those individual who pass the Spanish
examination to transacting approved Spanish language
consumer contracts only. The appointing insurer would
need to certify under penalty of perjury that the Spanish
translation is a true, correct, comprehensive, and
complete interpretation of the official English version
and would be required to ensure the appointed agents only
transact Spanish language consumer contracts on the
insurer's behalf.
1. Prior and Related Legislation
AB 720 (De León), Chapter 720, Statutes of 2007, split the
existing license into a life-only license and an accident
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and health license.
SB 1974 (Polanco), Chapter 358, Statutes of 2002, authorized
CDI to approve policies and associated materials in
languages other than English, but provided that the English
version is the official version and declares that an insurer
that knowingly misrepresents information provided in a
language other than English commits an unfair trade
practice.
POSITIONS
Support
American Council of Life Insurers
Association of California Life and Health Insurance Companies
Assurant Solutions - Preneed Division
California Health Underwriters
Cemetery and Mortuary Association of California
Lincoln Heritage Life Insurance Company
National Association of Insurance and Financial Advisors,
California
Primerica Ins.
Oppose
California Department of Insurance
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