California Gov. Gray Davis has signed into law an agent licensing bill. AB 393, California’s new agent licensing law, will require that all persons transacting insurance will be licensed by the state, protecting consumers by making sure policies are provided by knowledgeable, licensed agents.
“This is a major win for insurance agents and brokers and ultimately the insurance consumer,” said John Norwood, Legislative Counsel for Agents and Brokers Legislative Council. AB 393 adds new provisions to the Insurance Code and clarifies certain other sections to make clear that any person who solicits, negotiates, or effect contracts of insurance to the public must be licensed as an insurance agent or broker.
This law applies to insurance company employees, call centers, out of state broiler rooms, as well as agents and brokers and their consumer sales representatives.
“Hopefully this will put an end to the marketing of insurance to consumers by unlicensed entities using call centers located mostly out of state,” said Norwood. “It also makes a strong statement on behalf of the California Legislature, Department of Insurance, and every producer organization that we are opposed to Section 4(b)(8) of the proposed NAIC Producer Licensing Model Act, which would allow unlicensed individuals to transact insurance with existing policyholders. There was no support in the Legislature or by the regulator for such a provision, and it is not contained in AB 393.”
AB 393 also creates a new credit insurance license and would prohibit any person from selling credit insurance without meeting minimum professional requirements. The bill codifies many of the education, training and consumer protection provisions that were recently imposed by the Attorney General and various district attorneys in the American Bankers Life and Levitz Furniture enforcement actions.
AB 393 also adopts the regulatory framework of a bill signed into law last year creating a rental car limited license. Lastly, AB 393 would establish a new personal lines license available in California which will make it easier for companies that solely sell personal lines products to license their employees either as resident or nonresident agents in California.
Insurer associations had lobbied against the bill. The NAII supported the existing law, which required insurance company employees who solicit or negotiate insurance contracts in California to be licensed as agents.
Sam Sorich, vice president and western regional manager for NAII, felt there was no practical need for AB 393. He said the bill would force insurers to forward every incoming call relating to a policy change from California customers to an employee who has a California agent license.
Topics California Agencies
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