BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1899|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1899
Author: Calderon (D)
Amended: 8/19/16 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE: 9-0, 6/22/16
AYES: Roth, Gaines, Berryhill, Glazer, Hall, Hernandez, Liu,
Mitchell, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-2, 6/1/16 - See last page for vote
SUBJECT: Insurance: production agents: license examinations
SOURCE: Author
DIGEST: This bill requires, until January 1, 2024, the
California Department of Insurance (CDI) to provide the license
examinations for life, life-only, and accident and health
licensees in Spanish.
Senate Floor Amendments of 8/19/16 (1) add findings and
declarations regarding the demographic makeup of California's
Spanish-speaking population and the impact that offering some
examinations in Spanish may have on that population and (2) add
a declaration that the Legislature commends insurers that
provide Spanish translations of insurance products and
encourages every insurer to do so.
AB 1899
Page 2
ANALYSIS:
Existing law:
1)Requires insurance agents and brokers to be licensed by CDI
and requires that applicants pass a written examination to
become licensed.
2)Establishes categories of "life licensees" that transact
certain lines of insurance.
a) Accident and health licensees may transact health,
disability, credit disability, 24-hour care, and long-term
care. (Authorization to sell long-term care insurance
requires additional training.)
b) Life-only licensees may transact life insurance,
including endowments and annuities, and may include
accidental death or dismemberment and disability income
insurance.
c) Limited life-only licensees may only transact specific
life insurance policies or annuities that pay benefits in
an amount of no more than $20,000 and are designated for
the payment of funeral and burial expenses.
3)Provides that an applicant may take a single exam to be
licensed as a life-only and accident and health licensee.
4)Authorizes CDI to approve insurance policies in a language
other than English provided that the policyholder is given a
copy of the English version and a disclosure that the English
version is the official version and the translated version is
for informational purposes only.
AB 1899
Page 3
5)Treats a knowing misrepresentation of information provided in
a language other than English as an unfair trade practice
subject to special penalties.
This bill:
1)Makes findings and declarations.
2)Requires, as of January 1, 2018, CDI to provide the license
examinations for life, life-only, and accident and health
licensees in Spanish.
3)Requires CDI to submit a report to the Legislature no later
than March 1, 2023, that provides information about applicants
and licensees that will take the Spanish exam including pass
rates, the number of licensees that have kept their licenses,
and the number of consumer complaints received against those
licensees.
4)Sunsets the provisions of this bill on January 1, 2024.
Background
According to the U.S. Census Bureau estimates for the year 2013,
about 10.4 million people speak Spanish at home in California.
Of those, about 4.5 million people, a population larger than
many states, do not speak English "very well."
A study co-authored by the U.S. Treasury Department, Council of
Economic Advisors, and the U.S. Department of Labor found that
"by making it harder to enter a profession, licensing can also
reduce employment opportunities and lower wages for excluded
workers, and increase costs for consumers." Almost all
professional licensing exams are only offered in English.
AB 1899
Page 4
Currently, candidates who do not speak English as their primary
language may receive an additional 30 minutes.
New York, Texas, and Florida already offer examinations for some
insurance agent and broker licenses in Spanish. Applicants who
took Spanish exams experience a dramatically different pass
rates than those who took the English version. For example, in
2015, Florida reported a 65% first-time pass rate for the
English version of the life agent examination compared with a
25% first-time pass rate for the Spanish version.
CDI raised several concerns about the bill and recommends that
licensees that take the Spanish examination be restricted to
transacting approved Spanish language consumer contracts only.
No similar restriction applies to English-speaking licensees in
California or other states that already offer Spanish exams.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, this bill
results in estimated one-time costs of $230,000 in fiscal year
2017-18 to translate examination materials into Spanish,
including psychometric testing, and $30,000 to prepare a report
to the Legislature. The bill also results in estimated costs of
$360,000 in fiscal year 2018-19 and ongoing costs of $370,000
per year to administer the exam in Spanish and process the
additional applications. All costs are to the Insurance Fund
and are offset by the 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).
SUPPORT: (Verified 8/22/16)
American Council of Life Insurers
AB 1899
Page 5
Association of California Life and Health Insurance Companies
Assurant Solutions - Preneed Division
California Health Underwriters
Cemetery and Mortuary Association of California
Lincoln Heritage Life Insurance Company
National Alliance of Life Companies
National Association of Insurance and Financial Advisors,
California
Primerica Inc.
OPPOSITION: (Verified 8/22/16)
California Department of Insurance
ARGUMENTS IN SUPPORT: Several insurance trade associations
state that the option to have the examination administered in
Spanish will decrease potential miscommunication, increase agent
understanding of their duties and obligations, and allow
California to keep pace with the needs of its multilingual and
multicultural insurance consumers.
ARGUMENTS IN OPPOSITION:CDI argues that permitting an agent to
sell products and policies in English although they took and
passed the Spanish examination does not provide adequate
protection for the agent or the consumer. CDI explains that
there is no evidence that simply passing an examination in
Spanish prevents miscommunication or potential fraud during the
sales process.
ASSEMBLY FLOOR: 78-2, 6/1/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,
Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández,
Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine,
Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty,
Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,
Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas,
AB 1899
Page 6
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,
Waldron, Weber, Wilk, Williams, Wood, Rendon
NOES: Gallagher, Harper
Prepared by:Hugh Slayden / INS. / (916) 651-4110
8/22/16 22:02:39
**** END ****