The Reeducation of Texas Agents

Looming agent licensing changes stemming from the Gramm-Leach-Bliley Act could have a direct effect on how and what information agents receive through continuing education classes. Already, 30 states have begun preparing for those changes by joining the Midwest Zone Continuing Education Reciprocity Agreement through the National Association of Insurance Commissioners. Just how CE will change over the course of the next few years, though, is something even the experts are having a hard time concluding.

“CE is very subject to bureaucracy,” said Chris Amrhein, vice president of education for the Independent Insurance Agents of America. “And it doesn’t look like agent licensing is going to change that.”

Continuing education as a concept has been around for a very long time, but formal CE is a relatively new animal on the insurance frontier, stemming from a movement among life underwriters in the late 1970s and early 1980s. That movement, according to Amrhein, was a direct response to a large number of part-time agents getting into the business through pyramid schemes to sell policies to their family and friends.

“We in the P/C industry were fairly neutral on it because we’d had education requirements for quite some time and people had been coming to classes and no one was [requiring them to],” Amrhein said.

Minnesota was the first state to impose mandatory CE requirements for licensed insurance agents in the 1970s. Eventually, the National Association of Insurance Commissioners passed a “blueprint” Model Continuing Education Act in 1978, but it was modified by each state that adopted it, making it a bit of a nightmare to track. Today, independent agents are required to take courses in order to maintain licensure in 48 states. And it looks like it won’t be long before the two remaining states—Vermont and Hawaii—hop on the CE bandwagon, as both states have recently passed legislation on CE.

Soon, all 50 states will in some way oversee the educational requirements of insurance agents—a fact that may still prove somewhat distasteful to agents, but a fact that regulators say could improve efforts to nationalize agent licensing.

Agent licensing, or reciprocal licensing statutes, is one of the numerous requirements established by passage of the Gramm-Leach-Bliley Act. States have three years from enactment to do so. Should they fail, the National Association of Registered Agents and Brokers will be created as a multi-state licensing clearinghouse through which agents and brokers may apply for membership.

There are certainly differences at this point between state licensing requirements, including CE. But Beth Dempsey with Educational Insurance Services and the education consultant for the Independent Insurance Agents of America, said the only real difference in her mind are the number of CE hours states require and the actual testing requirements they impose.

Regulating CE
There are essentially three different ways states regulate the way CE tests are conducted: the honor system, the monitoring system and the proctor system. Under the honor system, agents sign a form verifying they took the test or will take the test without assistance. States using the monitoring system, such as Texas, require agents to take the exam in the presence of a third party with no personal or business affiliation. Finally, states using the proctoring method require that the vendor have an individual approved to proctor the test at the same time the course materials are approved. Also, the location and dates of the tests must be approved at least 30 days prior to when they are given.

On the other hand, classes are typically very similar in the way they are regulated.

“One can argue the merits of different classes from dawn ’til dark,” Dempsey said. “So the states are clearly responding to the demands of the buying public.

“There is some variation, however. And certainly, it is perceived that some programs are easier to get approval through in some states.”

Ultimately, that could be the crux upon which the NAIC’s CE reciprocity agreement could stumble. Under the agreement, states agree that, “with just a few exceptions, a course approved by a participating state will be accepted by other participating states by merely filing a standard filing form and one or two attachments.” Since the agreement was introduced in 1999, 30 states, excluding larger markets such as California, New Jersey, Florida and Texas, have agreed to participate. But those large-market states and many more could soon follow.

Cathyann Christians, education coordinator with the Texas Department of Insurance Licensing Division, said Texas could be among those even though Texas already has reciprocity agreements in place with some individual states.

Texas CE requirements
Currently, Texas requires property/casualty agents to fulfill 30 hours of CE every two years, including completing course work and passing the related exams. If Texas were to sign the NAIC reciprocity agreement, that would not change. What would change would be the classes Texas currently approves as acceptable for meeting those CE requirements.

“If a provider gets their course approved in their home state, then other states in that zone would also have to approve it,” Christians said. That means that if Texas were to join, it could very likely have to approve classes it might not otherwise have approved. Is it a move that could possibly lead to a dumbing down of the CE courses available to agents? “That is certainly possible,” Christians said.

What this has done is make states much more aware of how other states conduct business, Christians said. “We have always paid attention to what the other states are doing, not because we want to be similar, but because we have some of the same problems,” she said. “This has turned the flame up higher, though. I know that when we next change our rules, we will much more closely try to mimic what other states are doing.”

One thing that Texas is considering copying is outsourcing some of the educational processes to companies like Assessment Systems Inc. and Experior, which currently conducts new-agent testing for TDI. The companies are among just a handful that are tackling the paperwork-laden task of accepting and reviewing registrants. By making such a move, TDI would be free to return to approving course content. Already, TDI asks that agents keep track of an CE records rather than maintaining a file of an estimated 302,000 agents. “We conduct pop audits,” Christians explained. “If [agents] don’t have it, they lose their license.”

But changes to the way TDI conducts its CE oversight will, of course, have to be approved by the legislature. As of this writing, an agent licensing bill had not been introduced, though one is certainly expected to be passed during the 77th Session.

Time is of the essence
“Unfortunately, commissions are shrinking in our business, which means that time is more precious,” said Ed Zurek, co-founder of InsuranceStudy.com, a provider founded in 1999 that provides an assortment of CE courses solely via the Internet.

One of the biggest drawbacks to CE requirements has always been the time it takes to fulfill the necessary hours. Procrastination often leads to registering for any—the good, the bad, or even the ugly—available state-approved CE course. And we all know that cramming for a course does not always produce the best results.

“We’ve found that most agents log on at the end of the month, right before their certification expires,” said Cindy Davidson, director of insurance publishing for eMind. “We really are built for the procrastinator, but understand that we tell agents to give themselves some time…because once we send your name up to the state…it does take time.”

Nevertheless, immediacy is a big advantage for all online CE providers.

“The business model that we’ve created is to deliver just-in-time continuing education to licensed professionals,” said Les Ward, CEO of WebCE, based in Richardson, Texas. “And the systems that we have built are very efficient.”

WebCE’s courses have been approved and are available in 38 states with more approvals projected soon. While the company expects its Internet-based solutions to become most popular with users, WebCE will continue to focus on both traditional and technology-based training solutions.

“A year ago, convincing an independent agent to take a CE course online was a real challenge for us, but it’s really growing like wildfire,” Ward said. “I think that word of mouth helps. Agent A is telling Agent B in the agency that it’s easy and it’s quick.”

The challenges online
According to IIAA’s Amrhein, online CE makes specializing and individualizing courses very simple. Now, laws need to be amended so that agents can construct their own CE, he said.

“Agents should be able to construct coursework that suits their needs,” he said. “They should be able to present some information and say ‘I learned something here, what credit will you give me?’ Online lends itself to totally customized programs. If we could get to that point, to me that’s dynamite.” But there are no laws currently in place that provide for such a learning experience. “It’s just like saying, if you’ll give me credit for doing my own cooking, you provide the ingredients and tell me what I am allowed to make, but let me do the cooking without looking over my shoulder.”

Amrhein is also frustrated by many current vendors that he sees as doing a disservice to agents and consumers by providing sub-standard information in a get-in-get-out format.

“The really frustrating thing is that the agents buy into this,” he said. “The agents who already were professional are going to go out and find the classes that benefit them, but the ones that need it the most aren’t going to learn anything.”

The problem, he said, is that tech firms are more concerned about their platform than the information they are providing. “Their content is erratic because they’re not content people,” he said. “But they don’t know that because their job is the bells and whistles. In five or six years, we’ll see technology and content get married and it will be better—it’s just like television in its early days.

“There’s still going to be a primary issue of quality—it’s Walmart versus Sak’s… the same as in the seminar world, but right now it tends to be feast or famine.”

That’s because the technology has not advanced far enough for online courses to be truly exemplary according to David VanDelinder, education director for the Independent Insurance Agents of Texas. “You can’t just take the text and slap it on the screen and call that a quality learning experience,” he said. “The truly advanced courses with the streaming video are a long way off.

VanDelinder suggests courses on CD-rom if agents are interested in the self-study route. He said the Institute of America offers a CD-rom course titled Insurance Essentials that is quite good.

Amrhein, meanwhile, is impressed with www.learnsomething.com, saying that while they are the best online provider in the industry. “They’re about as good as it gets, but they still have a long way to go.

Re-inventing the learner
“Online CE is still in its infancy and I think it will evolve significantly over the coming years,” said Brad Nevins, one of the partners of FastrackCE.

According to eMind’s Davidson, an agent who wants to take a shot at online continuing education needs to be a “pretty astute Internet user.”

“And I would say that’s probably a marketing disadvantage for us at the moment,” she added. “How many agents are online? How many have the bandwidth to be handling this? How many are inclined to complete their CE differently than they’ve ever done it? How do we convince them of the ease of use and how engaging it is?”

“It’s still a big mix [of agents going online to fulfill CE courses and agents using traditional methods such as seminars or self-study], but it’s growing very dramatically towards all-electronic,” said WebCE’s Ward. “It’s an exciting field and we’re elated to be involved in it.”

The bottom line is that there are 1.5 million licensed insurance professionals in this country, which makes for a large number of continuing education requirements.

And while agents are getting more comfortable navigating around the Internet, CE providers are doing their part to ensure that valuable CE hours can be obtained as quickly and easily as possible. With time, it should only get easier.

Topics Texas Agencies Training Development