[co-author: Laura Hannigan]
Pennsylvania Gov. Josh Shapiro signed into law Senate Bill No. 1241 on Oct. 31, 2024, which modifies the Insurance Department Act of 1921 by simplifying licensing under the Insurance Producer Licensing Act (the Act).
Background
The key changes to the Act generally concern license prerequisites and continuing education requirements for license renewals. An "Insurance Provider" – defined to include a person that sells, solicits or negotiates contracts of insurance – must be licensed. Below is a summary of the key changes:
- Elimination of Preexamination Program Requirement: Previously, an individual applying for an insurance provider license had to first satisfactorily complete a minimum of 24 credit hours of approved preexamination courses. Following the amendment, candidates are no longer required to complete preexamination courses before applying for the insurance provider licensing examination. Instead, the individual need only complete and submit an application specifying the lines of authority they desire to be licensed and remit an examination fee.
- Definition of Candidate Revised: To conform with the above change, the term "Candidate" now solely refers to an individual who applies to take an insurance producer licensing examination under Section 604-A, removing the previous requirement for satisfactory completion of preexamination educational requirements.
- Continuing Education Requirements Updated: Once licensed, the Act requires the licensee to complete 24 credit hours of approved continuing education every two years for license renewal. Under the amendment, this requirement now includes a mandatory three credit hours on ethics and, for those with a property and casualty line of authority, two credit hours on flood insurance, both of which count toward the overall 24 credit hours needed for renewal.
According to a legislative staffer that worked on the bill, the elimination of preexamination courses for insurance provider exams aims to encourage greater diversity within the field, particularly among individuals from lower-income backgrounds who may have been deterred by the significant costs of the courses. While the removal of these preexamination courses is intended to broaden access, it does not compromise the quality of the field, as candidates are still required to demonstrate substantial knowledge in the subject matter. Ultimately, this change reflects a commitment to making the path to becoming an insurance agent or broker more accessible.
The changes to this bill are a significant shift in the requirements for becoming and remaining a licensed insurance provider in Pennsylvania. The amendment will take effect 180 days from the enactment of the bill. Insurance providers are encouraged to review the full text of the amendment and adjust their compliance policies accordingly.
