BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1899 (Calderon) - Insurance: production agents: license examinations ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 16, 2016 |Policy Vote: INS. 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Debra Cooper | | | | ----------------------------------------------------------------- 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 ? 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 ? 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. -- END --