Calif. Agent Association Wants to Phase-In New License Requirements

Insurance Brokers and Agents of the West (IBA West) is working to persuade the California Department of Insurance to phase-in implementation of provisions of a new law (AB 2782) that will require property/casualty insurance agents and brokers starting next year to obtain a new license in order to sell health insurance and related products.

The new requirement, which CDI introduced as part of its campaign to bring California insurance laws into conformity with “model” provisions adopted by the National Association of Insurance Commissioners, and otherwise with national norms, effectively repeals a California provision that has permitted fire and casualty insurance brokers and agents to sell “disability insurance,” a phrase the Insurance Code uses as a synonym for health insurance, without a separate health or life license.

IBA West said it and other producer groups did not oppose enactment of the new requirements for three reasons:

1. A desire to bolster state regulation — and stave off federal regulation — by bringing greater uniformity to insurance law;
2. A poll of IBA West members, conducted at the time the legislation was proposed, suggested that the vast majority of California producers who sell health insurance already have a health insurance license, which suggested the new law would have a minimal impact; and
3. The recognition that it is in the enlightened best interest of the industry and of consumers to ensure that professionals selling health insurance are appropriate trained and qualified.

The legislation takes effect Jan. 1, 2011, but neither the bill itself nor the history of legislative deliberations specifies whether the bill is intended to apply to licenses already issued, or only to licensees at renewal of their next licenses.

In notices emailed to all producers last week, CDI lawyers announced their intention to require all property/casualty producers needing a new license to sit for 20 hours of prelicensing education and take and pass a licensing examination before the end of the year.

In meetings with CDI officials and legislative leaders, IBA West said it has strongly urged CDI to phase implementation in enforcing the new requirement, if needed, only as existing fire-and-casualty licensees renew their licenses.

“Initially,” said IBA West General Counsel Steve Young, “the Department’s lawyers were strongly opposed to this suggestion, but there are increasing signs that the Department understands that this strict construction of the requirement is not necessary or desirable. We hope to be able to persuade CDI to make this change.”

Topics California Legislation Agencies