Insurance Buyer Beware: States Are Lowering the Bar for Agents and Brokers

A new California law removes 20 hours of required insurance education before an aspiring agent or broker can take tests to get licensed. These same agents or brokers can then easily get licensed in some other states.

By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS

published 21 November 2025

in Features

(Image credit: Getty Images)

When you have questions or need assistance regarding anything insurance-related, who do you think to reach out to? Chances are, you will think of a licensed insurance agent or broker.

Sure, you may reach out directly to an insurance company or ask a friend, but at the end of all those roadways, you are left with one constant — if you want to get accurate insurance information, you look for a well-educated, licensed insurance professional.

Unfortunately, a new law in California is removing from the equation some of the required education for insurance professionals.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

This new law, AB 943, goes into effect on January 1, 2026, and removes the requirement that an individual who wishes to sit for their property and casualty insurance license must take 20 hours of pre-licensing education.

You read that right: An insurance agent-to-be or broker-to-be will no longer have to spend at least 20 full hours learning about how insurance works.

Let's think about this …

Imagine if you learned your doctor didn't have to attend medical school. Sure, they passed tests required to get their medical degree, but no actual schooling? That's probably not going to make you feel very confident in their ability to diagnose and treat that weird pain in your side.

To get even more scary with the hypotheticals: Imagine if 16-year-olds didn't have to go to driving school before getting their license. Passing tests is very different than learning how to react in certain emergency situations, such as when a pedestrian with a baby stroller is unexpectedly in a crosswalk.

Supporters of this new law say agents and brokers will get on-the-job training and learn what they need to learn then. (Yes, that's actually their argument.)

When would this ever make sense?

I would like to know in what universe it ever makes sense to lower the standards required for a professional. When is it ever to the advantage of the consumer to have their trusted professional start out with less knowledge, less training and, therefore, less ability to do their job?

Seriously, I have racked my brain on this one, and I can't think of one single reason why this is a good idea. (If you have a theory, I truly would like to hear from you — you can reach me at questions@insurancehour.com.)

Here's some context

Let me put this in a little more context for you. Previously, you needed to have 20 hours for each type of insurance license you were looking to acquire.

Mind you, exams still had to be passed, but in order to even get to that point, you had to show you had basic knowledge — and not just the ability to memorize and regurgitate what it said in your test-prep book.

That means to get a property and casualty insurance license — think selling home and auto insurance — and a life and health insurance license, you had to complete 60 hours of training and education (property and casualty used to be considered two licenses).

Add to that, all applicants have to take 12 hours of insurance code and ethics classes (that hasn't changed). Great. So we'll have less-educated, but ethical, agents and brokers now. What could go wrong?

A wide-reaching impact

This isn't just a California thing either. This is a national trend. For instance, Pennsylvania has removed the insurance pre-licensing requirement for obtaining an insurance producer license.

North Carolina has ended the longstanding requirement that aspiring insurance agents complete a 40-hour insurance course.

Some states are also creating smaller niches for insurance licenses — such as a license to sell only car insurance. That means less education, less knowledge and less for the consumer to count on.

Without basic training and education, agents may lack basic fundamentals on how insurance works. They may not know the industry terminology. And they could see obtaining a license as more of a paperwork task, rather than a process to learn about the impacts of the insurance consumers are looking to buy.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

If you're thinking this won't affect you because you don't live in California or any of those other states, it may interest you to know that each state has reciprocity for insurance licenses. So someone could get a license in California, then pay a few bucks in fees in your state to get a license there, too.

The takeaway for consumers is: buyer beware. Sadly, we can no longer assume that being licensed to sell insurance means an agent or broker has even basic knowledge of the insurance industry or its products.

That means you need to take the time to ask any insurance agent or broker you want to work with how many years of experience they have and how long they have been licensed.

You can ask them something like, "When did you get your insurance license? And what post-insurance license designations do you have?" You can find an explanation for those designations at the credit rating agency AM Best.

You can also vet the agent by going to your state's Department of Insurance website and doing a search for their license.

Want to learn more about insurance? Visit icgs.org.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

TOPICS

Karl Susman is a veteran insurance agency principal, nationally engaged insurance expert witness and broadcast host who translates insurance from jargon to judgment. For more than three decades, he's helped consumers, courts and policymakers navigate coverage, claims and compliance. As Principal of Susman Insurance Agency, Karl works directly with households and businesses to compare options and make clear, defensible coverage decisions.