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Staff at the California Department of Insurance is expected to reccommend to Insurance Commissioner Steve Poizner delaying the implementation of provisions of a new law (AB 2782) that requiring property-casualty insurance agents and brokers obtain a new license in order to sell health insurance and related products.
"The good news is they have heard our concerns about the tremendous difficulties agents and brokers would face conforming to this law by January 1, 2011," said Steve Young, IBA West General Counsel and Senior Vice President. Young presented these concerns to the department at the Agents and Brokers Advisory Committee held in Sacramento earlier this week.
"We have asked for a six-month delay," said Young, who added that a reccomendation is being prepared by CDI staff and a decision is expected soon.
AB 2782 is the result of the CDI's desire 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, effectively repeals a provision—virtually unique to California—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.
AB 2782 would have required beginning on January 1, 2011 fire and casualty broker-agents to also hold an accident and health agent license to continue to transact disability insurance. This law applies to both California residents and non-residents and to individuals and business entities.
In notices emailed to all producers a week ago, CDI lawyers announcedtheir intention to require all property-casualty producers needing a newlicense to sit for 20 hours of prelicensing education and take and pass a licensing examination—before the end of the year, if implementation were not delayed. As current licensees, the fingerprinting requirement and the 12-hour training requirement on ethics and the California Insurance Code will be waived.
IBA West 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.
AB 2782 Questions and Answers
In the last few days, IBA West has received a number of questions from members and has received answers to those questions from department of insurance staff. Below are those questions and answers. If you have additional questions, please feel free to contact us by phone at (800) 772-8998 or by email at firstname.lastname@example.org.
Q. Will we need to comply with these requirements when we place travel accident coverage or AD&D or other ancillary coverages that are included in foreign packages, commercial products, and workers’ compensation?
Individuals transacting travel accident coverage or AD&D will need the Accident and Health license and individuals transacting Workers Compensation need the Casualty license. Further, the answer to the question about “commercial” would depend on whether it is commercial property, commercial auto or commercial liability. There is no type of insurance specified in the question in regards to “other ancillary coverages that are included in foreign packages.”
Q. Are disability or life (or both) licensees permitted to sell workers’ compensation, or is a casualty license required?
A casualty license is required to transact workers’ compensation.
Q. Is a property/casualty licensee now required to obtain an additional personal lines license in order to transact those coverages?
All of the specific lines listed in CIC Section 1625.5 fall within the authority/definition of either “property” or “casualty” in 1625(b)(1) & (2) (as amended by AB 2782). Therefore, after 1/1/11 an individual licensed as a Property and Casualty Broker-Agent may transact all of the coverages that a personal lines licensee may transact.
Q. In the breakout of property and casualty licensees, will CDI issue a new license number, OR will the same number be used for both capacities?
The same number will be used for both capacities.
Q. If a p/c licensee meets the requirements for a new disability license, will CDI issue a new license number, OR will the same number be used for all of the above?
The same number will be used for all of the above.
Q. Does this mean if you have a P&C license and a Life license you also need a 3rd license?
A "life" license authorizes the holder to transact either life-only, or accident and health, or both, depending on whether/how insurance companies have appointed the agent. A separate license should not be required, but it might be necessary in some cases to get the insurer to endorse accident and health coverage to the lines the agent is authorized to transact for that insurer.