Report - 2023 01 24 A30526 D248523 Bill Report 5026 Sbr Bfgt Ta 23

Summary

A Senate Bill Report on SB 5026, as of January 10, 2023, prepared by nonpartisan staff for the Senate Committee on Business, Financial Services, Gaming & Trade in Washington. The bill, sponsored by Senators Mullet and Dozier, would remove pre-licensing education requirements for first-time resident insurance producer license applicants. The background section describes licensing through the Office of the Insurance Commissioner and states that Washington requires 20 hours of pre-licensing education for each line of authority. The report lists no appropriation, a fiscal note requested on January 4, 2023, and an effective date ninety days after adjournment. It summarizes public testimony for and against the bill.

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                            SENATE BILL REPORT
                                  SB 5026

                                      As of January 10, 2023

Title: An act relating to the elimination of prelicensing education requirements for licensed
     insurance producers.

Brief Description: Eliminating prelicensing education requirements for licensed insurance
     producers.

Sponsors: Senators Mullet and Dozier.

Brief History:
     Committee Activity: Business, Financial Services, Gaming & Trade: 1/10/23.


                                     Brief Summary of Bill
           • Removes pre-licensing education requirements for first-time resident
             insurance producer licensee applicants.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Resident Insurance Producer Licensing in Washington. All persons wishing
     to sell, solicit, or negotiate insurance contracts in Washington State for any line of insurance
     must be licensed as an insurance producer. Insurance producer licenses are available
     through the Office of the Insurance Commissioner (OIC). Licensing requirements differ
     depending on the major line of authority (LOA) sought, such as life, disability, property,
     casualty and personal lines.

     First-time Resident Producer Licensees in Washington. First-time resident producer license
     applicants must:
         • be at least 18 years of age;
         • complete pre-licensing education (PLE) for each major LOA wished to be obtained;



     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                             SB 5026
         • pay any required fees; and
         • successfully pass the state examinations for the LOA in which they have applied.

     All persons applying for a resident insurance producer license must not have committed any
     act that is grounds for dismissal. Each applicant shall furnish fingerprints for submission to
     the governmental agency or entity authorized to receive this information for the state and
     national criminal background check.

     Resident Producers From Other States Who Move to Washington. Any resident producer
     licensed in another state, who wishes to move their residence to Washington, may waive the
     PLE and exam requirements if they apply for their Washington State license, cancel their
     previous home state license, and submit fingerprints within 90 days of moving to the state.

     Continuing Education. All licensees must follow up with continuing education
     requirements over the course of their career.

     Pre-licensing Education Requirements. Twenty-four states, including Washington, require
     first-time resident producer licensees to complete PLEs. The number of hours required of
     the PLE differs by state and major LOA. In Washington, an applicant must complete 20
     hours of PLE for each LOA wished to be obtained.

     Summary of Bill: Those seeking a license as a first-time resident insurance producer are
     not required to complete pre-licensing education to obtain their insurance producer license
     in Washington.

     Appropriation: None.

     Fiscal Note: Requested on January 4, 2023.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.

     Staff Summary of Public Testimony: PRO: The examination to become a licensed
     insurance agent in Washington State is complicated and passing requires extensive study
     and knowledge. Removing the education requirement opens the door to individuals who are
     unable to afford the PLE courses, which can be upward of $500. The bill aims to diversify
     the insurance employee pool by eliminating this barrier to entry. This will provide more
     employment options to more individuals and will help fill the gaps that insurance agencies
     are facing. Other states have already lifted this requirement and have not reported a
     significant impact on exam pass rates. Insurance producers in the have not reported
     significant concerns regarding the removal of the pre-license requirement.

     Any person wanting to become an insurance producer can still take a PLE. This bill does


Senate Bill Report                             -2-                                         SB 5026
     not take away option. We need competent insurance producers. There are many changes in
     the workforce right now. Many people are working multiple jobs that may not have time to
     take PLEs, but they will still need to meet the ultimate bar. Having worked with the OIC
     licensing teams, they have no desire to dumb down the exam. This will reach more middle-
     and lower-income people and those from diverse backgrounds.

     CON: Independent insurance agents are in opposition of this bill. They helped establish the
     pre-license education requirement to set a high standard of professionalism in this career
     field. Requiring the pre-requisite courses sets a high bar and ensures the quality of insurance
     agents, necessary for the adequate management of insurance. Being able to set aside the
     time for their proper education demonstrates an individual’s commitment to the profession.
     National insurance companies or direct sellers, such as Geico, are estimated to benefit at the
     expense of local and independent insurance companies if this requirement is lifted.
     Employers have expressed concern about creating a fast track of uneducated and unprepared
     workers into the insurance industry.

     Persons Testifying: PRO: Senator Mark Mullet, Prime Sponsor; David Forte, Office of the
     Insurance Commissioner; John Mangan, American Council of Life Insurers ; Chris Bandoli,
     National Association of Insurance and Financial Advisors Washington.

     CON: Bill Stauffacher, Independent Insurance Agents and Brokers of Washington.

     Persons Signed In To Testify But Not Testifying: No one.




Senate Bill Report                              -3-                                         SB 5026


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