BILL ANALYSIS Ó
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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