BILL ANALYSIS
SB 396
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Date of Hearing: July 8, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 396 (Calderon) - As Amended: June 30, 2009
SENATE VOTE : 36-0
SUBJECT : Insurance Commissioner reports.
SUMMARY : Requires the Insurance Commissioner (IC) to report
the pass rate of first-time applicants for specified insurance
agent licenses, and if the overall pass rate is less than 65%
for a specific license category then the IC shall determine the
pass rate of examinees by demographic information including
ethnicity/race, gender, and level of education. Specifically,
this bill :
1)Requires the IC to provide the following information through
December 31, 2012:
a) The number of first-time examinees who passed the exam
and their overall pass rate for applicants for a fire and
casualty broker-agent license, a personal lines
broker-agent license, a limited lines auto-only agent
license, a life-only agent license, and an accident and
health agent license.
b) The total number of examinations and the mean
examination score for all examinees for applicants for a
fire and casualty broker-license, a personal lines
broker-agent license, a limited lines auto-only agent
license, a life-only agent license, and an accident and
health agent license.
2)Provides that if the overall pass rate for any category of
license noted in 1a), above, is less than 65%, then the IC
shall determine, for that category of license, based on
demographic information voluntarily provided by applicants,
the pass rate of examinees by each of the following:
ethnicity/race, gender, and level of education.
3)Requires the IC to include the demographic information noted
in 2), above, in the next Department of Insurance annual
report to the Governor and Legislature.
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EXISTING LAW :
1)Requires the IC to annually report to the Governor, the
Legislature, and the legislative insurance committees a
tabular statement and synopsis of the reports filed in his/her
office and showing the condition of the insurance business and
interests in California.
2)Requires that the IC provide the following information through
December 31, 2012:
a) The total number of applications filed for a fire and
casualty broker-agent license, a personal lines
broker-agent license, a limited lines auto-only agent
license, a life-only agent license, and an accident and
health agent license.
b) The total number of licensees who are issued a fire and
casualty license, a personal lines license, a limited lines
automobile license, a life-only license, and an accident
and health license.
c) The total number of licensees with both a life-only
agent license and an accident and health agent license.
d) The total justified complaints against those holding a
fire and casualty license, a personal lines license, a
limited lines automobile license, a life-only license, and
an accident and health license. This information shall be
specified annually for five years.
e) A cumulative summary of the data specified in paragraphs
(a) - (d) compared to the licenses issued for fire and
casualty broker-agent, personal lines broker-agent, and
life agent for the 2007 year. This information shall be
provided at the end of 5 years following the issuance of
auto-only agent, life-only agent, and accident and health
agent licenses.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose of bill. The purpose of this bill is to obtain data
SB 396
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on the number and pass rate of first-time examinees for
limited lines of agent licenses, as well as the mean
examination score for examinees by license type.
2)Background. The American Council of Life Insurers (ACLI) and
the National Association of Insurance and Financial Advisors
(NAIFA) are embarking on a multi-faceted project to improve
the way in which the states test and license life insurance
agents. ACLI and NAIFA have concluded that comprehensive
reform of the life agent testing and licensing processes are
necessary to attract new entrants to the field of career life
agent, and to grow delivery of needed life and income
protection products to the middle market. One study indicates
that since 1975 there has been a 46% decline in the number of
new insurance agents, and that this has led to fewer Americans
having the protection they need to secure their families'
future.
3)Argument in support . ACLI and NAIFA state that it is
important that the insurance agent licensing process recognize
the changing demographics of our country and be flexible to
ensure that every community is served by qualified life
agents. This bill would help obtain the data necessary for
the California Department of Insurance to determine if certain
examinations produce the unintended effect of inappropriately
excluding specific population groups from obtaining an agent
license.
4)Technical amendment . The bill requires the Insurance
Commissioner to report the pass rate of first-time applicants
for specified insurance agent licenses, and if the overall
pass rate is less than 65% for a license category then the
Commissioner shall determine the pass rate of examinees by
demographic information including ethnicity/race, gender, and
level of education. It is the author's intent that
"determine" in this context means that the Commissioner would
calculate the pass rate for the named demographic groups using
the same standard or methodology as used to determine the
overall pass rate of all examinees. In order to clarify this
intent, it is recommended that the bill be amended as follows:
on page 2, line 30, delete the word "determine" and insert
the word "calculate".
REGISTERED SUPPORT / OPPOSITION :
SB 396
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Support
American Council of Life Insurers (ACLI)
Association of California Life and Health Insurance Companies
(ACLHIC)
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086