HD11 - Establishing Continuing Education Requirements for Insurance Agents Licensed in the Commonwealth
Executive Summary: House Joint Resolution 89 directed the Bureau of Insurance of the State Corporation Commission to study the possibility of establishing continuing education requirements for insurance agents licensed in this Commonwealth. Legislative Request The study was requested by the General Assembly because: 1. There have been many changes in the insurance industry in recent years, particularly in the types of insurance products available und their complexity; 2. There have also been numerous changes in the laws governing agents; 3. There is a need for agents who have been licensed for a number of years to become aware of the legislative changes and the types of new products that are available; 4. There is an important need for agents to remain competent in a constantly changing and complex industry; and 5. There is a belief that continuing education requirements would benefit both the public and insurance agents. Trend Towards Continuing Education Seventeen other states have recognized the need for continuing education by legislating mandatory requirements. The trend towards mandatory continuing education requirements in the country, however, is by no means confined to the insurance industry. Attorneys in Virginia are now required to complete a minimum of eight hours of approved continuing education courses each year. The Committee on Continuing Professional Competence, in its successful recommendation to the Virginia Bar, noted that there is only a small percentage of incompetent attorneys in all of Virginia, but they reflect badly on the rest of the profession. The Committee maintained that an eight hour per year requirement would not be burdensome to the lawyer, either in time or expense. The success of the Virginia Bar requirement, as well as the insurance continuing education requirements of seventeen other states, are supportive examples for the Virginia insurance requirement. Industry Advisory Committee An advisory committee was formed to assist the Bureau in developing a proposal for a continuing education requirement. The committee met four times with Bureau staff beginning in May, 1986. In addition, Bureau staff conducted independent research regarding continuing education, including administrative and cost concerns, status of continuing education requirements in other states, and advantages and disadvantages of mandatory continuing education requirements. Over the course of several meetings with the advisory committee, compromises were reached on a number of issues, including the use of an advisory committee to assist the Bureau, the type of courses to be approved, clarification of what constitutes one credit for the purpose of the requirement, an exemption for currently licensed agents, requirements for agents holding more than one license type that is subject to the requirement, and a prospective grace period for administrative compliance by agents. Proposed Requirement The proposed continuing education requirement as recommended by the committee will apply to all resident health, life and health, and property and casualty agents, as well as property and casualty insurance consultants. The requirement provides that each agent or consultant will have to complete eight continuing education credits per year. Agents who have two or more licenses would have to complete an additional four credit hours for each additional license. The option to pass an examination in lieu of taking courses has been included. A carryover provision is also included by which credits earned in one year that are in excess of the required number may be applied to meet the requirements of the next year. Advantages and Disadvantages of Mandatory Continuing Education The major arguments in favor of a mandatory requirement are that it will assist in increasing the competency of agents and thereby better protect the public, only a mandatory requirement will reach those most in need, and the proposed requirement is flexible enough not to be burdensome. The major arguments against a mandatory requirement are that additional government intervention is unnecessary, learning is impossible to legislate, and the expense of attending classes is considerable. Committee Recommendation - Support Requirement After extensively discussing all the issues, the majority of the committee voted to endorse the proposed continuing education requirement. The public relies greatly on the licensing of professionals as an indication of their competence. It is the protection of insurance policyholders' interests that supports the concept of mandatory continuing education and consideration of the proposed legislation for adoption. The majority of the committee believes that the proposed requirement does not place an unrealistic burden on any company, agency, agent, or consultant. An increasingly sophisticated public wants to deal with insurance professionals who are up to date in their knowledge of the more complex array of insurance products available on the market today. Mandatory continuing education is a means to promote greater competency among insurance agents. |
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