SENATE BILL REPORT

SSB 5357

BYSenate Committee on Financial Institutions & Insurance (originally sponsored by Senators von Reichbauer, Moore, Rasmussen, Matson and Johnson; by request of Insurance Commissioner)

Defining insurance education provider and establishing requirements for such providers.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):January 31, 1989; February 28, 1989

Majority Report:  That Substitute Senate Bill No. 5357 be substituted therefor, and the substitute bill do pass.

      Signed by Senators von Reichbauer, Chairman; Johnson, Vice Chairman; McCaslin, McMullen, Moore, Sellar, Smitherman, West.

Senate Staff:Walt Corneille (786-7416)

                  April 13, 1989

House Committe on Financial Institutions & Insurance

AS PASSED SENATE, MARCH 8, 1989

BACKGROUND:

Every applicant for an insurance agent, broker, solicitor, or adjustor license must first pass an examination before obtaining the license.  Oftentimes people in preparation for taking the examination attend classes.

The Insurance Commissioner is required to establish minimum continuing education requirements for the renewal or reissuance of an insurance agent's or broker's license.  The courses used for the satisfaction of the continuing education requirements must be approved by the commissioner.  The actual providers of continuing education classes or the providers of prelicense classes do not have to be approved by the commissioner.  Situations have occurred where the teachers of prelicense exam classes have removed or copied questions from the exam and provided them to people enrolled in their classes.  There is no specific prohibition against this practice.

The commissioner currently has the authority to fine licensees for each offense in an amount of not less than $50, nor more than $500, for the maximum total of $1,000.  There is no authority provided the commissioner to fine individuals providing insurance education.

SUMMARY:

It is unlawful for any person to remove, reproduce, duplicate or distribute questions used to test agents, brokers, solicitors or adjustors for licensing.  The licensing examination must be sufficient so as to reasonably assure that passage indicates the applicant is qualified with regards to knowledge and education.

Insurance education provider is defined so as to include an insurer, health maintenance organization, professional association, educational institution created by statute, licensed vocational school or an independent contractor to whom the commissioner has given authority to conduct courses satisfying continuing education requirements.

The authority of the commissioner to fine licensees is extended to allow the commissioner to fine insurance education providers.  The amount of the fine is specified as not more than $1,000.

If a finding is made by the commissioner or a court that an insurance education provider has violated any statute or regulation pertaining to insurance education, the provider must pay the cost of the investigation.  Reasonable attorney's fees may also be awarded.

Insurance education providers must post a bond, cash deposit or letter of credit no greater than $5,000 for the first course approved and $1,000 for each additional course.  Proceeds from the bond, deposit or letter of credit inure to the commissioner for payment of investigation expenses and/or fines.

The commissioner may require information regarding course curricula, faculty and information related to licensed activities.  The commissioner has the authority to grant approval of an insurance education provider to conduct and certify completion of continuing education and prelicense classes.

The commissioner may take into consideration the method of education utilized by an insurance education provider but may not discriminate based on the method of education.  Denial of approval of a course may not be based wholly on the method of education even if nontraditional teaching techniques are utilized.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: Roger Polzin, Insurance Commissioner's office (pro original, con sub.); Becky Bogard, Audio Educational Systems

HOUSE AMENDMENT:

The reproduction, removal, duplication or distribution of test questions is unlawful only if done by an unauthorized person.  An insurance education provider may create and use sample test questions in teaching an approved course.

The licensing exam must be sufficiently difficult to test an applicant's knowledge.

The commissioner may require that a licensed agent with appropriate experience be on the premises when instruction is offered.

Approval of the commissioner to conduct insurance classes may be granted only if the educator demonstrates the ability to conduct classes and certify completion.