BILL ANALYSIS
SB 396
Page 1
SENATE THIRD READING
SB 396 (Ron Calderon)
As Amended July 9, 2009
Majority vote
SENATE VOTE :36-0
INSURANCE 10-0 APPROPRIATIONS 16-0
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|Ayes:|Solorio, Garrick, |Ayes:|De Leon, Conway, Ammiano, |
| |Anderson, | | |
| |Charles Calderon, Carter, | |Charles Calderon, Coto, |
| |Feuer, Hayashi, Nava, | |Davis, Duvall, Fuentes, |
| |Niello, Torres | |Hall, Miller, |
| | | |John A. Perez, Skinner, |
| | | |Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Hill |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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 calculate 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; and,
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.
SB 396
Page 2
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
calculate, 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.
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; and,
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
SB 396
Page 3
at the end of 5 years following the issuance of auto-only
agent, life-only agent, and accident and health agent
licenses.
FISCAL EFFECT : One-time fee-supported special fund costs of
$30,000 to CDI for database reconfiguration and on-going
absorbable costs to CDI to comply with the reporting requirements
established by the bill.
COMMENTS :
1)The purpose of this bill is to obtain data on the number and
pass rate of first-time examinees for limited lines of agent
licenses, to identify the mean examination score for examinees
by license type, and if the overall pass rate of a specified
agent license is less than 65%, to obtain the data by
ethnicity/race, gender, and level of education.
2)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)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
identify if certain examinations produce the unintended effect
of inappropriately excluding specific population groups from
obtaining an agent license.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0002303