About the Author: Cindy has spent over 35 years in national insurance education, serving as Education Trustee for the SILA Foundation, Education Director for SILA Inc., and holding board positions with the Society of Insurance Trainers & Educators (SITE), the Insurance Regulatory Examiners Society Foundation (IRESF), and the California Department of Insurance Curriculum Advisory Board. She holds the CIC, ITP, CDEI™, and SILA-F designations.
For decades, getting an insurance license meant completing state-mandated education to ensure new agents understood the complex products they were about to sell. Today, that requirement is rapidly disappearing across the country.
Under pressure from carriers and industry groups seeking to streamline hiring, a growing list of states are scaling back or completely eliminating prelicensing education (PLE) requirements. But is removing this requirement truly solving hiring challenges, or is it simply lowering the bar for professional competency?
It was around 20+ years ago when the Uniform Licensing Standards were first developed by the National Association of Insurance Commissioners Producer Licensing Working Group, and I remember those conversations.
It was 2002, and in response to the threat of federal regulation via Gramm-Leach-Bliley, the National Association of Insurance Commissioners (NAIC) adopted Uniform Licensing Standards for producer licensing. The NAIC infamously did not take a position on whether prelicensing education should be required, but standardized the number of hours for states that did require prelicensing education at 20 hours per line of authority. In subsequent years, many states updated their requirements to match the 20-hour standard. At this time, there was about a half & half split between states that required prelicensing education and those that did not.
Reactions to attempts to make the requirements were fiercely split:
In 2009, the NAIC published a State Licensing Handbook for insurance producer licensing, which preserved both the non-recommendation and the 20-hour standard.
Fast forward to today, and the scale is tipping heavily toward elimination of these educational requirements.
More recently, under pressure from individual insurance companies as well as industry lobbying groups like the American Council of Life Insurers (ACLI), a growing number of states have reduced or even eliminated prelicensing education requirements entirely.
The argument is that PLE requirements adversely impact nontraditional candidates and, by extension, underserved communities by creating a “barrier to entry” for new insurance producers.
Initiatives at the ACLI have focused on growing the producer community and increasing diversity by identifying and removing unnecessary barriers to licensing.
“It’s not about ‘lowering the bar’ or changing the underlying regulatory apparatus for how producers get licensed,” per comments submitted by the ACLI, “Our view is that the best course is to remove pre-licensing mandates altogether, as the evidence shows these requirements are both unnecessary from a consumer protection standpoint and are undermining the pursuit of diversity, equity, and inclusion in insurance.“
Some regulators also think it’s worth getting rid of mandatory prelicensing education because it requires significant department resources to enforce compliance. Others think a baseline amount of education remains important for consumer protection.
Testing services and some education providers have taken a more agnostic position, arguing that regardless of whether prelicensing education is required, candidates still need some kind of preparation for the state licensing exam.
States that have eliminated/reduced the prelicensing education requirement in recent years:
States that continue to require prelicensing education:
There isn't a lot of variation in first time pass rates in states that require prelicensing education vs. those that do not; the inference being that mandatory education doesn’t meaningfully impact pass rates one way or the other.
Opponents of mandatory PLE point out that first-time exam pass rates don't differ significantly between states that require education and those that don't. The inference? Mandatory education doesn't seem to help candidates pass the exam.
However, pass rates are a poor metric for evaluating public policy and consumer protection. Exam cut scores, difficulty levels, and testing formats vary widely from state to state. Pass rates on Life and Health exams trend higher when compared to Property/Casualty or Personal Lines, so line of authority matters a lot! Anyone who has ever tried diving into the data can tell you that comparing pass rates across state lines is nowhere near an apples-to-apples comparison.
The primary purpose of an insurance exam is to prove "entry-level minimal competence." But without mandatory prelicensing education, a 50-to-100-question exam becomes the only hurdle standing between an untrained individual and the ability to sell complex financial products to the public.
This makes the licensing exam a single point of failure—and heightens the risk of exam compromise:
Consider how other comparable industries regulate entry-level professionals:
Insurance sales remains one of the few accessible, highly rewarding "blue collar/white collar" careers where individuals without a college degree can build lucrative long-term businesses. Completing 20 to 40 hours of online, asynchronous education is a modest investment for a lifelong career—not an insurmountable barrier.
Eliminating prelicensing education risks commoditizing training into basic "cram-and-pass" drills rather than building actual product knowledge.
As state legislatures simultaneously add specialized training requirements—such as annuity suitability best interest standards, flood insurance, and long-term care training — it is counterintuitive to strip away foundational prelicensing knowledge for new agents just entering the field.
If our regulatory system requires fingerprints and background checks to sell insurance, maintaining a baseline educational foundation isn't just a good idea—it's vital for protecting the insurance-buying public.
No. Insurance prelicensing requirements vary by state and may also differ by license type or line of authority. Some states mandate formal coursework, some require reduced or specialized education, and others allow candidates to proceed directly to the licensing exam.
Supporters of eliminating mandatory PLE commonly point to cost, time, administrative burden, workforce recruitment, and concerns that mandatory coursework may create unnecessary barriers for nontraditional candidates.
No. Eliminating a mandatory education requirement does not eliminate the knowledge candidates need to demonstrate on the state licensing exam. Candidates may still choose structured insurance prelicensing courses to prepare even when their state does not require a specific number of PLE hours.
There is not a simple apples-to-apples relationship between mandatory PLE and pass rates across states because exam difficulty, cut scores, testing formats, and lines of authority differ. Pass rates also do not measure longer-term outcomes such as producer retention, consumer complaints, E&O claims, or professional competency.
Prelicensing education can provide a structured foundation in insurance products, regulations, terminology, and consumer responsibilities. Even where states make education optional, candidates still need to build the knowledge required to pass the licensing exam and perform effectively once licensed.