American Council of Life Insurers | 101 Constitution Ave, NW, Suite 700 | Washington, DC 20001-2133
The American Council of Life Insurers (ACLI) is the leading trade association driving public policy and advocacy on behalf of the life
insurance industry. 90 million American families rely on the life insurance industry for financial protection and retirement security. ACLI’s
member companies are dedicated to protecting consumers’ financial wellbeing through life insurance, annuities, retirement plans, long-
term care insurance, disability income insurance, reinsurance, and dental, vision and other supplemental benefits. ACLI’s 280 member
companies represent 94 percent of industry assets in the United States.
acli.com
Rikki Pelta
Senior Counsel
(202) 624-2355 t
April 1, 2024
NAIC Special Committee on Race and Insurance
Life Workstream
Sent via email: jcoo[email protected]
RE: Barriers to Access to Life Insurance
Dear Commissioners Fowler & Humphreys,
Thank you for the opportunity to comment on the barriers to access to life insurance. Please find
below the American Council of Life Insurer’s (“ACLI”) proposal to address barriers to access to life
insurance and help close the coverage gap.
A Path Forward That Allows Successful Fulfillment of the NAIC Life Race &
Insurance Charge
Life insurers believe that all Americans should have access to tools and resources that will help
them thrive and succeed. The NAIC has, among others, the following charge related to race &
insurance in the life insurance space:
◼ Life Workstream —The marketing, distribution, and access to life insurance products in
minority communities, including the role that financial literacy plays.
Introduction
In order to fulfill this charge through existing NAIC workstreams, ACLI proposes the following
suggestions. These suggestions are based on data ACLI received through a survey of people of
color who were either in the market to purchase life insurance or who already owned or received
coverage.
1
Overall, the data shows that these consumers prioritize trusted, simplified, and
modernized processes.
2
These preferred processes are already reflected in previously
implemented NAIC charges as well as industry initiatives.
1
Zebra Strategies, Inc., “Exploring the Impact of Race and Innovation on Life Insurance Applications Among
Black/African American, Hispanic /Latinx People of Color” (2022).
2
Id.
Life insurers have been working to enhance interactions with customers, making it easier and more
convenient for modern customers to access the financial protection they need. This includes
greater use of technologies that simplify the underwriting process and a broader-based agent
population to help more consumers gain access to a financial professional’s assistance. Industry
improvements in these areas will help close the life insurance coverage gap. A regulatory
environment that supports these enhancements will help ensure these efforts are successful.
In fact, the NAIC already has several established groups that are currently working toward
regulatory improvements in the producer licensing and innovation/e-commerce areas. These
existing NAIC groups (Producer Licensing Task Force (D) + Innovation and E-Commerce Working
Groups (H)) could be tasked with adapting their existing efforts to more fully address and fulfill the
charge set forth above. Progress has already been made in both areas that is directly responsive
to the charge; with respect to producer licensing, it is identifying and removing barriers to licensure
that likely disproportionately adversely impact members of minority communities; with respect to
innovation/e-commerce, it is examining ways technology can be harmonized with current
regulatory requirements such that members of minority communities have greater access to life
insurance products. Both of these areas are further highlighted below.
Producer Licensing
Issue: Increase Access to Life Insurance for Underserved Communities
ACLI supports the removal of unwarranted barriers that may impede the ability of candidates to
become licensed by or employed with the insurance industry. Some of these barriers are
structural, like excessive and unnecessary pre-licensing mandates. Others are just outdated, like
only offering licensing exams in English.
Adopting these commonsense reforms will enhance the recruitment, development, and retention of
diverse candidates in the life insurance producer community. And it will lead to more American
families feeling secure that their financial futures are safe and protected.
Proposed Solutions:
I. Encourage a more diverse, inclusive community of producers to increase trust in the
industry; and
II. Utilize an innovative approach to modernize processes so they are more accessible.
I. Distribution
Producer diversity is important to increasing access for minority communities because it helps
build trust for consumers to purchase products from someone with a similar background. Data
shows that there is a lack of trust in the financial services industry amongst minority communities
and continuing to build trust in those communities will directly address this coverage gap.
3
Data
further shows that trust is usually generated when a potential customer has a shared background
with the producer.
4
The following proposals are suggested as ways to increase diversity and
remove unnecessary barriers to producer licensing.
3
Id.
4
Id.
◼ Background Checks and Waivers
o ACLI proposes to improve the 1033 waiver process for potential applicants with a
criminal history by:
▪ Promoting the uniform availability of 1033 applications and related
documents on department websites;
▪ Eliminating fees associated with 1033 applications;
▪ Supporting and providing guidance on innovative ways of interacting with
1033 candidates. For example, allowing applicants to assess their likelihood
of success before embarking on the application process; and
▪ Exploring avenues to share information concerning 1033 waiver processes
between states that utilize centralized licensing platforms such as NIPR and
Vertafore.
o NAIC committee(s) of jurisdiction: Producer Licensing (D) Task Force and Antifraud
(D) Task Force
◼ Mandatory Pre-Licensing Education Hours
o The presence of pre-licensing education mandates creates an additional barrier to
entry and has not been shown to impact test scores, so ACLI proposes to remove
these mandates.
o Research shows that pre-licensing mandates do not produce candidates more
prepared to pass the exam and the NAIC Producer Licensing (D) Task Force
acknowledged this in a 2011 memo.
o As of August 2023, Tennessee, Washington, and Alabama have eliminated these
mandates with broad support. Twenty-six states and the District of Columbia do
not have mandatory education hours.
o These mandates can discourage potential applicants due to unnecessary
commitments of time, money, and methods of study. Potential applicants may be
caregivers, considering insurance as a second career, or come from non-traditional
education backgrounds and require more flexibility in preparing for the exam.
o NAIC committee(s) of jurisdiction: Producer Licensing (D) Task Force
◼ Additional Language Licensing Exams & Materials
o In order to increase diversity, the NAIC should encourage and provide guidance
related to expanding non-English language options for insurance licensing exams
and materials.
o Each state should consider the most spoken languages within their state. A number
of states have already expanded exams to offer in Spanish.
o NAIC committee(s) of jurisdiction: Producer Licensing (D) Task Force
◼ Online Accessible Exams
o Encouraging and providing guidance related to online proctored exams could help
remove barriers by making the exam process more convenient for a wider variety of
individuals such as those in rural areas.
o Online proctored exams can offer equivalent security measures and pass rates are
nearly identical.
o During the COVID-19 pandemic, states had to switch to online exams and now,
almost all states continue to offer online exams.
o NAIC committee(s) of jurisdiction: Producer Licensing (D) Task Force
◼ Exploring Mentorship Programs by Reimagining Continuing Education’s Role in Retention
o ACLI proposes to creatively reimagine the role of continuing education credit during
the early stages of a producer’s career. With much of the producer workforce
looking to retire in the next decade, it is crucial to attract new talent. Encouraging
and providing means for mentoring could provide a meaningful step towards
attracting this talent.
o The industry could benefit from a mentorship curriculum that encompasses enough
to replace continuing education for the first four years a producer is licensed.
o States should also be encouraged to join the 14 states that offer continuing
education credit for association membership.
o These measures are likely to attract new producers who may not have considered a
career in financial services by providing a process to learn and develop necessary
skills.
o NAIC committee(s) of jurisdiction: Producer Licensing (D) Task Force
II. Innovation
As electronic communications and transactions have rapidly evolved over the past several years,
customer expectations have also changed, and the industry is seeing an increase in the value
placed on modernized processes. Data shows that this is especially true in minority communities.
5
The COVID-19 pandemic highlighted how insurers can safely and efficiently interact with
consumers via digital means.
ACLI supports innovation and technologies that are part of the solution by driving expanded
consumer access and consumer affordability in underserved communities. ACLI, therefore,
proposes building out a modern e-commerce framework to streamline processes related to
purchasing insurance so it is more accessible to underserved communities.
◼ ACLI recommends that the E-Commerce (H) Working Group build upon its informational
framework by creating guidance for and encouraging states to modernize processes such
as:
o Waiving wet signature requirements for regulatory filings;
o Allowing for remote notarization;
o Allowing for remote regulatory examinations;
o Promoting use of electronic applications;
o Promoting use of e-delivery; and
o Examining filing requirements related to electronic applications.
◼ NAIC guidance would encourage a level of uniformity in the states that would benefit
consumers, regulators, and the industry. Many consumers prefer streamlined, electronic
processes and the E-Commerce (H) Working Group is best suited to evaluate the impact
the above recommendations have on consumers and ensure the appropriate consumer
protection measures are in place.
Conclusion
ACLI appreciates the importance and benefits of the charge related to race & insurance in the life
insurance space. Addressing areas where the industry can improve marketing and distribution
5
Id.
practices in minority communities is an important step towards achieving equality in the life
insurance market. Fostering a regulatory environment that helps expand outreach to consumers,
both online and in person, will advance the industry and NAIC’s and the industry’s shared mission
to help more families build financial security by closing the coverage gap. Continuing to work with
the existing NAIC workstreams to achieve this goal through the aforementioned proposals will lead
to further trust between the industry and consumers.
Sincerely,
Rikki Pelta
Senior Counsel
ACLI
