The insurance field is filled with abundant opportunities for people with all educational backgrounds. For example, it provides the potential for people who might not have a college degree to get an immediate start in a high-value and rewarding field.
A career in insurance involves working with consumers to engage in important and complex financial transactions that protect both property and financial assets. To ensure public safety, the industry is regulated on both the federal and state levels. The public is best served by a well-trained producer base familiar with state rules and regulations that possesses sufficient knowledge, skills, and abilities to make suitable recommendations for insurance products and services.
To ensure that insurance producers experience some amount of formal education prior to licensure, many states require candidates to complete 20-40 hours of prelicensing education before taking the state licensing examination.
In the past seven years, however, nine states have eliminated the prelicensing education requirement, with more expected to follow. Most recently:
For more compliance and regulatory updates for the Insurance Industry, read our July Insurance Compliance Update.
For individuals hoping to become licensed in states that no longer require prelicensing education for certain lines of authority, licensure only requires candidates to:
Rules vary greatly between states, and this regulation change is no exception. It is more important than ever to understand state-specific prelicensing requirements before starting the licensing process.
This marks a significant change for the industry and impacts those interested in earning an insurance producer's license the most. In states that no longer require prelicensing education, it is now up to learners to take control of their own course preparation to ensure they’re set up for success.
Eliminating the requirement for prelicensing education, it is argued, might attract a wider variety of prospective agents to the field, make it less complicated and less expensive to enter the profession, reduce compliance expenses and hassles for both candidates and regulators and require fewer regulatory resources (since regulators review and approve the education providers and courses).
However, license exams are still relatively difficult and require knowledge of contract law, insurance principles, insurance products and policies, and state laws.
Some prelicensing exam-prep training remains essential to successfully passing the state licensing exam. Building a strong foundation in the line of authority can give new insurance professionals a leg up in a competitive field.
Education plays a vital role in every complex, consumer-facing industry. Consider the rules in a similarly regulated profession: real estate. Real estate agents are often compared to insurance agents: they are regulated by state real estate commissions which establish the qualifications for agent licensing. All 50 US states require formal real estate education prior to the state licensing exam, ranging from 40-168 hours. Similarly, real estate appraiser licensing ranges from 75-300 hours of required education prior to taking the state exam.
Prelicensing education enhances public protection and ensures a higher caliber of professionals in the field who know what they need to know to provide the best advice, products, and services possible to the consumer.
If you don’t want to waste time and money taking and retaking licensing exams, you’ll need a plan to understand and retain the topics tested on the exam. With the wide variety of topics on the state exam content outlines, depending on the line of authority, anywhere from 20-40 hours of focused study is recommended for exam success.
Some licensing exams are considered more difficult than others. For example, the Personal Lines exam is generally considered easier than the full Property/Casualty exam because it tests on a more limited spectrum of policies.
Modern learning platforms will break down complex topics, rules, and regulations into engaging and intuitive formats – such as videos, interactive quizzes, focused reviews, digital flashcards, and realistic exam simulations to help you retain vital information that you can take with you beyond the licensing exam and into your career.
Insurance rules and regulations differ by state, so it's essential to have access to the most up-to-date state-specific content while preparing for a licensing exam.
Find a prelicensing training provider that maintains its content in real time. Most states conduct exam reviews and revise the outlines and questions on the exams at least annually. Avoiding the study of irrelevant laws and regulations will free up your time so you can focus on studying topics that will be tested and are most important to future clients.
It’s easier than ever to complete prelicensing education. Most course prep providers host everything online, making it possible to prepare for your exam from the comfort of your home and on your timeline, using a personalized study schedule that fits your unique needs.
Studying online requires discipline, so following the “recommended study steps” and a “recommended study calendar” will help you reduce distractions and remain on task, building and retaining the knowledge you need to pass the state exam on the first try. Practice exams that are a true exam simulation in terms of length, composition, and scoring also help build confidence before the real exam.
About the Author
Cynthia Davidson, CIC, ITP, SILA-F, CDEI
Cynthia is currently the Director, Insurance Content & Compliance at ExamFX.
A self-proclaimed insurance nerd, Cynthia has worked in producer licensing for 35+ years. She's been in the industry long enough to remember when licensing exams were taken with paper and pencil.
Cynthia is a Certified Insurance Counselor (CIC), Insurance Training Professional (ITP), SILA Fellow, and Certified Distance Education Instructor. Over the years, she's been a hands-on participant in much of the regulatory and industry evolution and has worked to drive increased efficiency and uniformity in producer licensing. As a subject matter expert for National Job Analysis and Exam Development, Cynthia helped define topics included in state tests.
As an industry leader, she's a coveted speaker and panelist at industry conferences. She has served in leadership roles on the Boards of the Society of Insurance Trainers & Educators, the Securities & Insurance Licensing Association, the SILA Foundation, and the Insurance Regulatory Examiners Society Foundation. Cynthia is currently leading ExamFX's Insurance Content and Compliance team, delivering on efforts to ensure ExamFX licensing study materials remain current and exam-relevant.
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