Canadian Underwriter

How a broker regulator plans to fix “abysmal” licensing exam results

May 8, 2019   by David Gambrill

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As brokers across the country report difficulty in finding qualified employees, the situation in Alberta may be compounded by an “abysmal” pass rate on the provincial broker licensing exam.

“As it currently stands today, we are at a 36.5% pass rate for first-time exam writers,” said Anthonet Maramieri, chief operating officer of the Alberta Insurance Council (AIC), the province’s broker regulator. “That is an abysmal number and there is no sugar-coating that.

“My understanding is that exam results have not actually ever been higher than 50% in terms of first-time passes, so there is something to be done here. There is a problem, and how do we address it?”

AIC shared its current work to address the problem at the Insurance Brokers Association of Alberta (IBAA)’s 2019 convention in Banff, Alta.

Maramieri’s presentation observed that the IBAA has been “very, very vocal” for years in urging the provincial government to change the rules to allow for “equivalency.” Essentially, Alberta’s brokers want provincial regulations to be changed to allow designations offered by industry education providers to be considered the equivalent of passing the province’s broker license exam. In some Canadian jurisdictions, professional designations are considered to be the equivalent of passing the broker’s licensing exam.

Examples of industry designations include the Canadian Accredited Insurance Broker (CAIB) designation, offered by the Insurance Brokers Association of Canada, and the Chartered Insurance Professional (CIP) designation, offered by the Insurance Institute of Canada.

One of the AIC initiatives now underway involves figuring out what learners are doing to prepare for the licensing exam. Called the Data Validation Initiative, the AIC is attempting to validate student training methods and the course provider before the learner takes the exam. The purpose is to verify an educator’s performance by linking their student materials with validated exam statistics.

One of the AIC’s objectives is to publish exam pass rates of learning methods and course providers “with full transparency.”

As it stands, establishing a link between a student’s exam result, the study materials used, and the educational provider that creates the course materials is challenging. Course providers may not be aware that a student who has failed the exam used their course materials. And the AIC cannot disclose a student’s exam results to the education provider because of privacy legislation.

Under the Data Validation Initiative, before the licensing exam is written, the AIC would be able to ask the student what course materials they are using; the AIC would then ask the educational provider to verify that they provided the materials to the student.

“There are numerous [study] methods,” Malamieri said. “Everything from self-taught to ‘taught by my Dad,’ or ‘I took a course.’ We are working to make sure the information is independently validated and that we can work more collaboratively with course providers to the extent that they can ameliorate what they’ve put in place – the mechanisms, the studies, the instructors, the methods.”

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8 Comments » for How a broker regulator plans to fix “abysmal” licensing exam results
  1. Dawn says:

    Going from being able to walk in an pass the exam with no previous knowledge or studying to being more difficult than a Secondary School exam is too extreme. There is a set base of knowledge that an individual needs to have to be Level 1 Insurance Agent/Broker. The exam should be based around that knowledge, not based on any area of insurance that an experienced broker/agent would handle. Setting individuals up for failure is no way to support those wanting to start a career in the industry.

    • Josh says:

      It’s a challenging dichotomy because “lowering the bar” is rarely the answer, and can undermine the integrity of the broker intermediary role. It should be hard, but I also think it is worth revisiting what skills are necessary for an entry level broker to need. Many of the exams that exist (including those of many industry designations which are being considered as an “equivalency”) are exercises in memorization or dated or obscure materials with very little practical application. Some of the CIP books were written in the 90s!

      While technical knowledge is crucial, much of it is acquired through experience and “time down range”. I’d like to see more emphasis on communication and client education skills, risk assessment, working with clients through challenging renewal cycles, negotiations, how to build market relationships etc. It’s great if a broker understands the product, but what good is it if they can’t communicate with their clients, use the “big stick” method to negotiations every time and/or burn out the market through perpetual marketing exercises?

      It likely also makes sense for all jurisdictions to consider separate personal lines and commercial licenses. While there is some overlap, the skills and knowledge required for the two are very different.

      Maybe it’s time to rethink the whole thing and renovate the process, not just give it a fresh coat of paint? Let’s build for the future.

    • RZ says:

      I couldn’t agree more with you.

      35% pass rate means that too many people who are doing this exam are wholly unprepared. Making it easier for people who clearly exemplify that they are not competent enough to be a broker, is not good for those individuals, the consumer, or the industry as a whole.

    • Thom. C.J. Young says:

      Did you read the article? At no point in time has anyone been able to walk in and pass the level 1 licensing exam without studying the material. The best Alberta average outcomes after studying historically have been in the 50% area. Different brokerages, companies and education providers maintain that there average outcome after training their candidates ate higher than the average.

      For the level 1 license the test is focused on basic insurance concepts and the duty of agent, it is an entry level assessment. The exam is based on the need for that knowledge. The level 2 license exam (which in Alberta has an even more abysmal pass/fail ratio, tests advance insurance concepts. The level 3 examination focuses on advanced and specialty insurance concepts (which have nothing to do with the level 3 responsibilities) and the regulatory responsibilities of the Designated Representative. (which is entirely the reason for the level 3 license)

      This project in Alberta has been going on now for 6 years (some would say more) to put together a license standard that meets the needs to protect the public by ensuring that the people holding licenses are educated enough to serve the public properly. There’s no evidence whatsoever that the Alberta public are not being properly served. There’s considerable evidence that Alberta is currently the most difficult place in North America to obtain a license to sell insurance and where through the licensing regulations in place Alberta agents and brokers suffer the most intrusive regulatory over site of any regulation anywhere. Ironically, there’s no evidence anywhere that the public is provided any higher level of protection as a result or that Alberta agents and brokers are in anyway superior to those in other provinces or states.

      The regulator is not going to change the manner in which it operates until the industry makes the noise necessary to motivate a political resolution of the issues!

      The AIC/GIC in Alberta recommended the licensing equivalency solution for level 1, 2 and 3 licenses on achievements of specific levels of training in the IBAC/IBAA and the Insurance Institute (Alberta) courses 4 years ago, they’ve been endorsed by the Superintendent of Insurance and forwarded to the Alberta Minister of Finance’s office for enactment and despite almost monthly requests from the AIC they’ve been ignored. They will still be there when the new governments Minister of Finance takes the desk, lets hope that perhaps a better sense of urgency produces this at least in short order.

      The education story needs a lot of work before we’ll be happy with that process and the testing results. Alberta license holders should get their behinds in a chair at the upcoming stakeholders seminars in Edmonton and Calgary and make their voices heard!

      No one seems to be able to figure out how to develop a course curriculum that produces a 60% or better examination pass rate. Perhaps it is up to the regulator to prepare the course study material? That would not be my preference anymore than the regulator actually teaching it.

      The examinations are multiple choice questions with a sampling of true or false questions. One possible reason that the pass rate is so low is that it’s virtually impossible to accurately test for comprehension of advanced insurance concepts in a multiple choice exam. Considering the concepts focused on in the level 2 and 3 exam this thought would likely be accurate.

  2. Rachel says:

    Some of the industry exams require a huge amount of “memorization” which is not very practical in this day and age. With all the resources available online, it seems unreasonable to expect students to memorize wordings that have become so fluid and constantly changing. Perhaps teaching students to properly use the tools they have available would be more beneficial. Adult learning concepts are not consistently applied and many learners are at huge disadvantage, especially those who have been out of school for several years.

  3. We have and continue to offer an online self-study course for Levels 1 &2 in Alberta (since 2009). We are quite confident in the material we cover in the courses and teaching methods we offer, however since we do not know where our students fail on the exam, we are quite blind as to how to help them if they fail.
    We continue to work with the AIC to perfect this system of check and balance and look forward to the changes promised for this coming fall.

  4. Aneta says:

    I only had 5 weeks in total to learn the material and be able to pass 70 % I only passed 53% on my first attempt
    That is setting up new hires for failure, The course should be divided in 3 different exams.
    So you cram less material and be easier to focus on the next material.

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