California Delays Licensing Implementation Six Months

The California Department of Insurance is delaying for six months the implementation of a new licensing requirement for fire and casualty licensees that want to sell health insurance. AB 2782 would have required existing fire-and-casualty licensees to obtain a separate license by Jan. 1, 2011, to continue selling health insurance. The Producer Licensing Bureau will be sending this notice to all licensed fire and casualty broker-agents soon.

The six-month extension means that fire and casualty broker-agents licensed prior to Dec. 31, 2010 will now have until June 30, 2011 ,to obtain the accident and health agent license to continue to transact accident and health insurance, the Insurance Brokers and Agents of the West (IBA West) explained. The extension applies to both individuals and business entities as well as to both California residents and nonresidents.

IBA West earlier this month had urged CDI to change the licensing requirement and phase-in implementation in enforcing the new requirement, if needed, only as existing fire-and-casualty licensees renew their licenses.

The department explained the decision to delay implementation arose from the fact that AB 2782 was signed by Governor Schwarzenegger in late September 2010 and many broker agents were unaware of the new requirement allowing just six weeks for broker agents to obtain the accident and health agent license prior to the Jan. 1, 2011 effective date. In addition, the department realized the number of affected agents and brokers was significantly more than what was originally estimated, according to IBA West.

“We are very pleased that the professional staff in the licensing bureau, Department lawyers, and Commissioner Steve Poizner personally, all recognized our concerns about the tremendous difficulties agents and brokers would face conforming to this law by Jan. 1, 2011,” said Steve Young, IBA West general counsel and senior vice president.

AB 2782 was the result of the CDI’s desire, which IBA West supported, to enhance professional training and consumer protection, and to bring California insurance laws into conformity with “model” provisions adopted by the National Association of Insurance Commissioners, and otherwise with national norms. It 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.

Topics California Agencies Casualty