BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1899 (Calderon) - Insurance:  production agents:  license  
          examinations
          
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          |Version: March 16, 2016         |Policy Vote: INS. 9 - 0         |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Debra Cooper        |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  AB 1899 would require the California Department of  
          Insurance (CDI) provide the license examinations for life,  
          life-only, and accident and health agents in Spanish. 


          Fiscal  
          Impact:  
           One-time costs to CDI of $230,000 in fiscal year 2017-18 to  
            translate examination materials into Spanish, including using  
            psychometric testing. (Insurance Fund)


           Estimated costs to CDI of $360,000 in fiscal year 2018-19 and  
            ongoing costs of $370,000 per year for administering the life  
            agent, life-only agent and accident and health agent exam in  
            Spanish, including obtaining background checks of applicants  
            and reviewing applications. (Insurance Fund)








          AB 1899 (Calderon)                                     Page 1 of  
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           Potential revenue of $557,000 in fiscal year 2017-18, $1.1  
            million in fiscal year 2018-19 and $1.4 million per year  
            ongoing generated from exam fees ($50 per exam) and licensing  
            fees ($170 per license). (Insurance Fund)


          Background:  There are a number of type of insurance producer licensed  
          through CDI. A Life-Only Agent is entitled to transact insurance  
          coverage for human lives, benefits of endowment and annuities,  
          death benefits or dismemberment by accident, and benefits for  
          disability income. An Accident and Health Agent may transact  
          insurance coverage for sickness, bodily injury, accidental death  
          and benefits for disability income. A "Full Life Agent" (life  
          agent) is entitled to transact insurance coverage comprising the  
          entitled coverage of both life-only agents and accident and  
          health agents. 
          California residents applying for an insurance producer license  
          issued from CDI must first pass a qualifying examination.  
          Currently, all of the examinations are only offered in English.  
          According to the U.S. Census Bureau, approximately 10.4 million  
          people in California speak Spanish at home. 


          Although the content of an examination can be fairly easily  
          translated into another language, translating examinations so  
          that they are useful in practice as a measure of an individual's  
          skill, knowledge, and ability is not as straightforward.  
          Psychometric testing must be used to ensure validity and  
          comparability of results with the original language and ensure  
          that the translation does not inadvertently introduce error or  
          bias. 




          Proposed Law:  
            This bill would require that by January 1, 2018, the  
          examination for a license as a life agent, life-only agent, and  
          accident and health agent be provided in English and Spanish.


          Related  
          Legislation:  SB 1974 (Polanco, Chapter 358, Statues of 2002)  








          AB 1899 (Calderon)                                     Page 2 of  
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          authorizes CDI to approve policies and associated materials in  
          languages other than English if certain conditions are  
          satisfied.


          Staff  
          Comments:  Some states already offer examinations for life  
          producer licenses in Spanish. In calendar year 2014, New York  
          reported a first-time pass rate of 13% for their Spanish  
          examination and Texas reported a 24% first-time pass rate. For  
          calendar year 2015, Florida reported a first-time pass rate of  
          25% for the Spanish version of their examination. The estimate  
          for administering examinations in Spanish in California assumes  
          approximately 8,800 individuals would take the Spanish versions  
          of the three examinations and approximately 2,600 (nearly 30%)  
          of those individuals would pass the exam and become licensed.


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