In August, while taking an online continuing education course required by the North Carolina Department of Insurance as part of his biennial re-licensing process, a licensed North Carolina insurance agent was both surprised and disturbed to learn that the provider was tracking the amount of time he spent online in reviewing the study materials.

After finishing the online course, Thomas Vass, a licensed property and casualty, long-term care, and life and health insurance agent based in Raleigh, expected to take the exam. Instead, Vass received a pop-up alert in his Internet browser, stating “you must spend 3 hours in this course before you can take the exam. You have spent only 2 hours and 10 minutes. No activity detected. Please click Okay to resume this course.”

Vass told Carolina Journal that he emailed WebCE, the course provider, to find out what was going on because he’d never experienced this when taking online courses.

In an email response to Vass, Cori Robarge, a WebCE customer service representative, said that on April 19, the North Carolina Department of Insurance had changed the delivery requirements for all online correspondence continuing education courses. All online CE providers are required to track the time students spend in their online courses. Moreover, the time spent must equal the number of CE hours for which the course is approved and that “students who do not interact with the online course after 10 minutes of inactivity must be disconnected.”

Vass was unaware of any public hearing or notification about the rule change. He said the change is just another example of NCDOI’s licensing rules, which are stricter than those in neighboring states and, he says, do not provide any added benefits to consumers or public welfare. Moreover, he says, agents have few avenues to voice concerns about the level of regulatory oversight.

He contacted the Agent Services Division at NCDOI Aug. 15 for an explanation and left a message for Christina Hunter to contact him. After receiving no response for nearly a week, Vass left a message with the insurance commissioner’s office.

Hunter later called Vass and defended the rule, saying it would be unfair for one agent to spend less time than another taking an online class. When Vass asked why there had been no public input prior to the rule going into effect, he said Hunter told him brusquely that the Department of Insurance “could do what they want.”

“Their job is to regulate,” Vass said, “not to enforce equality.”

Vass has been a licensed agent since 1978 and wonders why every agent must spend the same amount of time completing a course regardless of experience or knowledge.

“This type of monitoring is an unwarranted intrusion by the government into my private interests and affairs,” Vass said.

Oversight requirements

Insurance regulation is controlled by the states, not the federal government, so each state sets its own requirements. Vass says North Carolina’s CE rules are the most burdensome in the nation.

Administrative code rules in North Carolina require licensed agents to complete 24 CE hours every two-year licensing term, including three hours of ethics training. While other states have similar requirements, other states often give more CE credits than North Carolina for the same courses.

A quick review of WebCE’s online course catalog shows, for example, that the Equity Indexed Annuities course provides 8.0 CE credits for North Carolina agents but 10.0 for Tennessee and 12.0 for South Carolina. Personal Life Insurance Planning is 3.0 credits for North Carolina agents but 4.0 for Tennessee and 7.0 for South Carolina.

CJ asked Hunter why NCDOI began tracking the time insurance agents spend in an online course. She said, “there’s no problem because agents can stop and start a course at anytime.” Hunter did not answer further questions and terminated the call.

A follow-up call was transferred to the Public Information Office. CJ received an email from Marni Schribman, NCDOI’s assistant director of public information, with supporting documentation and a detailed response with clarification of the rules in question.

ASD officials said the minimum seat time requirement for online CE courses has been in place since 1990, though it was not enforced strictly before this year. WebCE began monitoring the time spent in an online course as the result of “a corrective action plan that was put into place by WebCE, not an administrative code rule change.”

In 2007, ASD notified CE providers that it had received numerous complaints over a five-year period about online CE courses and would seek rule changes to address those concerns. Among the complaints were that licensees “bragged” about shortcutting the CE requirements by taking online courses instead of classrooms courses, “bragged” about individuals taking the online CE courses for others or for multiple individuals, or printed the test for the online CE course and then looked up the answers without reading any course material.

After auditing a number of online CE course providers and observing that some had not complied, ASD adopted the NAIC Guidelines for On-line CE to ensure CE providers have “appropriate security measures.”

A public hearing was held July 6, 2010, and the comment period ended Aug. 16, 2010. Deputy Commissioner Etta Maynard notified CE providers Aug. 27, 2010, that the filed CE rule revisions had been withdrawn pending further study to address industry concerns raised during the public comment period. The notification also stated random audits would continue and ASD might take administrative and even regulatory action against a CE provider who did not comply with statutes and rules.

ASD told CJ that in April, WebCE was notified that it may be in violation of code rules that had been in place since 1990. WebCE then submitted an action plan to modify its course delivery system. It would enforce the minimum seat time requirement, activate a student inactivity requirement, and impose a “strict must read” procedure.

Natalie Simpson, a spokeswoman for the Independent Insurance Agents of North Carolina, told CJ that NCDOI had notified the association before the time-tracking requirement went into effect and it supported the change. Simpson said the group had not received any complaints from members.

In early October, Vass said an ASD representative contacted him and apologized for Hunter’s behavior during their initial telephone conversation. ASD did not explain why the rule change had been implemented without public hearings.

Karen McMahan is a contributor to Carolina Journal.