State Of Ohio DEPARTMENT OF INSURANCE 2100 Stella Court, Columbus, Ohio 43215 (614) 644-2658        www.ohioinsurance.gov	Bob Taft, Governor J. Lee Covington II, Director

Testimony of
Holly Saelens, Assistant Director, Policy and Legislation
The Ohio Department of Insurance
Before
The Ohio Senate Insurance, Commerce and Labor Committee
Thursday, October 11, 2001
On
Senate Bill 129, Agent Licensing Model Act

 

Mr. Chairman and members of the Committee:

My name is Holly Saelens and I am an Assistant Director for Policy and Legislation for the Ohio Department of Insurance. On behalf of Director Lee Covington, I am pleased to be here today to testify in support of Senate Bill 129, the Agent Licensing Model Act sponsored by Senator Scott Nein. Today, I have been asked to focus on the most significant changes to the substitute bill that is being considered by members of this committee.

Before explaining those changes, I would like to express my appreciation to those individuals who participated in the discussions this summer to reach consensus on the changes that are included in the substitute bill. A list of those individuals is attached for your review. As mentioned in my previous testimony, S.B 129 is necessary in order for Ohio to comply with the requirements of the federal Gramm-Leach-Bliley Financial Modernization Act of 1999 (GLBA). GLBA required at least 29 states adopt full reciprocity for non-resident insurance agents to avoid the creation of a quasi-federal organization entitled NARAB -- the National Association of Registered Brokers and Agents by November 2002. Enactment of Senate Bill 129 ensures that Ohio will be reciprocal for non-resident agents, creates the foundation for uniformity in processing of agent licenses, and more importantly, tells the U.S. Congress that Ohio will meet the requirements of GLBA.

I would now like to take a few moments to highlight some of the major changes that are represented in this substitute bill.

• Senate Bill 129 incorporates a model act adopted by the National Association of Insurance Commissioners. This model is what is being used by all other states when pursuing reciprocity and uniformity.
• The substitute bill maintains the elements needed for reciprocity and makes the following changes-many of these changes are preserving existing law in the substitute version of the bill:
  
  1. References to "producer" have been returned to the more commonly recognized term of "agent." This change will ensure continuity with the current law.
  2. The bill maintains exemptions to licensure that are in current law. This includes the current customer service representative exemption as well as the credit employee exemption;
  3. Provides statutory guidelines for depository institutions regarding the sale of insurance products. These guidelines will protect consumers by requiring disclosures before a product can be sold.
  4. Maintains a requirement in current law regarding the general suitability of applicants for an insurance license. This change maintains the status quo and allows the department to deny licenses to unsuitable applicants such as those with multiple misdemeanor or public safety convictions.
  5. Maintains current law regarding a misdemeanor conviction being the grounds for discipline or denial of a license; and
  6. Maintains the surety bond requirement for resident producers

In summary, the substitute bill reflects the need for reciprocity, moves Ohio closer to uniformity, and maintains some unique elements of the current Ohio law regarding licensure.

This concludes my testimony and I would be happy to try to answer any questions.