I participate in a Yahoo! Group called “RiskList.” This email discussion group consists of insurance and risk management professionals from around the world and is an excellent source of information about technical, real world insurance and risk management issues.
Today, a thread morphed into a discussion of insurance industry prelicensing and continuing education (CE). One of the U.S. participants opined, “My complaint for years has been how easy it is to get an insurance license.” A British correspondent replied, “It’s even easier in the UK. The life insurance side is regulated, but on the general insurance side there’s not even a requirement for ten minutes worth of training, let alone any exams to pass before you can roll up your sleeves and get stuck in.”
When I did a licensing school in the 90’s, it was 3 days long. I had to cover all insurance related statutes and all personal and commercial lines coverages, from personal auto to CGL and homeowners to workers comp and bonds. One of the students might be a guy who was working at a convenience store the day before the class started who had done no pre-class preparation. Our passing ratio was over 90%, which tells you how ridiculously easy the exams were. Theoretically, from working at a 7-11 to quoting General Electric’s insurance program in a week’s time.
In our state, the prelicensing requirements for study and supervised training were 600 hours for a manicurist and 1,500 hours for a hair stylist. So, if you wanted to cut Jack Welch’s hair and give him a manicure, you needed 2,100 hours, but only 40 hours (class and self-study) to bid on GE’s insurance program. I wrote a more detailed article about this for Property Casualty 360 in 2011:
“40 Hours and I’m an Insurance Agent”
For continuing education, there are some excellent programs but they constitute a small minority of what’s available. Much of the online CE is material presented at a consumer level where you can take an exam without any study or preparation and easily get 24 hours (2 years) of credit inside an hour. If you don’t believe me, check this CE discussion area out:
Posted by Agent X:
“Now I have used [name of online CE provider] and others, but which one is easiest with the least amount of questions to do? Anyone with intimate knowledge about this?”
Posted by Agent Y:
“Good God it is CE and takes 30 minutes every 2 years. I have used [name of same online CE provider] and their [sic] is no requirement to read the text…Straight to the tests and you can retake IF you fail and it is a big IF because this is all simple stuff you learned when you got licensed.”
Many regulators collect the fees paid by CE providers and/or students but do little or nothing to gauge quality or relevance. You literally can spend 30 minutes getting 24 hours of CE. If you’re a personal lines CSR, you can take a commercial lines course at the last minute to fulfill your annual requirement. Other regulators make you jump through paperwork hoops that are effectively bean counting and don’t guarantee a quality program.
Someone asked me not long ago, “You know what they call the person who finishes last in his or her medical education?” Answer: “Doctor.” Having a license and, to great extent today, having a professional designation tells you absolutely nothing about the qualifications of the agent.
One of my goals in “retirement” is to work with some folks who want to change this so that top flight agents can be identified and give consumers and businesses some assurance that, as the knight in Indiana Jones and the Last Crusade said, they have chosen wisely. Stand by for news.
P.S. Check out this parody I created years ago when online “learning” first got started in the early days of the internet:
Bill Wilson
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I agree, Bill. I recall taking the agents licensing exam in ’81 and Florida required 240 hours of instruction before being permitted to sit for the final, written exam. It was not unlike a “blue” book from college days. One thing I vividly remember is we were required to select a case study and write about the insurance exposures associated with the case. I recalled reading the cases during the exam to isolate the one which would allow my “B.S.” degree to get me through.
So I can’t remember which case I wrote about but I do recall avoiding the one with the aircraft exposures. Sure, I remember hangerkeepers, hull coverage and a few other items but not enough for my “B.S.” degree. So I turned in my exam booklet and waited for the many weeks it took to get it graded and then received a notice I had passed. My newly minted insurance license allowed me to sell auto, home, property, liability and workers compensation. On top of that, I’m now licensed to sell aircraft insurance. The very line of insurance I avoided to discuss during the exam.
Go figure.
You raise another issue about wherther “Property” and “Casualty” licenses that most states issue are relevant anymore. These licenses originate from the days when the same insurance company could not, by law, sell both property and liability coverages. Before homeowners and businessowners policies were introduced, you wrote the property in a policy from one carrier in a group and the liability coverage in another carrier in the group, or maybe different insurers entirely. I much more relevant licensing scheme today would start with a personal lines license and commercial lines license.
Great article, as always, Bill. I truly believe it should take more to get your license. Similar to contractors and apprenticeships, you should have some hands-on experience before jumping into a CIC type class, to obtain your insurance license..
In turn this may lead to the industry not being so heavily regulated.