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NAIC Panel Eyes Producer Licensing

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SEATTLE–Race, education and personal accountability are some of the topics that came up here during a session on producer licensing.

A working group on Producer Licensing Testing and Examination held a public hearing Tuesday here at the summer meeting of the National Association of Insurance Commissioners (NAIC), Kansas City, Mo.

Bill Anderson, a senior vice president at the National Association of Insurance and Financial Advisors, Falls Church, Va., and Thomas Harris, a senior vice president at The Penn Mutual Life Insurance Company, Horsham, Pa., talked about the need to meet the growing demand for licensed agents in their industry.

Witnesses reported that examination passing rates vary widely from state to state.

Producers are much more likely to pass in some states, such as Illinois, than in other states, Harris said.

“An agent’s chance of getting a license depends more on where they live than what they know,” Harris said.

Test takers who are members of minority groups under-represented in the agency work force tend to have a low producer test passing rate, Harris said.

Martin Shapiro, a professor at Emory University who studies the effects of race in testing, said redesigning tests can increase passing rates without lowering the overall quality of the individuals who pass the tests.

Luther Ellis, associate deputy commissioner with the District of Columbia Department of Securities and Banking, and Ron Henderson, a director with the Louisiana Department of Insurance, said personal responsibility and adequate education outweigh other factors in determining who passes licensing tests.

Robert Commodore, a senior director in the Minnesota Department of Commerce, said the idea of lowering producer education and testing standards

is scary.

The NAIC working group should not be trying to make major corrections to fix a minor problem, and, instead, it should focus on increasing auditing of education courses, to make sure individuals are getting an adequate amount of educational time, Commodore said.

Individuals representing test developers and education providers said they use standardized systems in their work and deliver products designed to meet individual states’ mandates. They said there is nothing in their work designed to skew the results in any direction.