"
Alternative title: "Zenefits Scandal Highlights Perils of Excessive Occupational Licensure". What exactly is the purpose of requiring a license for selling insurance? If consumers desire some assurance of quality in their insurance brokers, then certification, not licensure, would be sufficient."
Wasn't there just recently an article here complaining about the quality of academic accreditation, or in other words about how those certifications were simply bogus?
Let's say you buy insurance. Let's say that after paying premiums for a couple of years, you come down with some dread disease. You contact the insurance company to tell them that you need $737,248.44 or you'll die from your dread disease. They say, "LOL. We don't do that. So sorry." You visit your broker and he says, "I didn't know! I just printed up a certificate and hanged (hung?) out my shingle. Guess you're out of luck."
Lawsuit time? Hm. I suppose your estate would still have standing to sue. Unless we've got tort reform as well as licensing reform. Anyway, the neat part is there isn't any consequences to the broker. Sure, you could hit him with fraudulently claiming to be certified, but there are all these other people doing the same sort of thing without any certification at all, so it doesn't sound like a major crime. And of course, we're talking about employment benefits, so you aren't the one picking the broker, your employer is...
Here's the question: How would any approach to avoiding that situation not involve something that strongly resembles licensing? (Here's a hint: what is the difference between pulling someone's certification and pulling their license?)
"The only justification for licensure over certification is a paternalistic one: consumers are simply too ignorant to choose their own insurance brokers, even if some are certified and some are not. As Milton Friedman said in Chap 9 of Capitalism and Freedom, this argument "amounts to saying that we in our capacity as voters must protect ourselves in our capacity as consumers against our own ignorance.""
Actually, that's a pretty fair description of what is going, how it's supposed to work, and why. Here's another quote for you: "The doorstep to the temple of wisdom is a knowledge of our own ignorance," which may or may not be Benjamin Franklin. But I suppose the idea that one may not know something, and that the something might be important, is unappealing to many people. Stop and ponder for a moment how much trust you put into the people around you on a daily basis. And most of them don't even have an incentive and opportunity to screw you.
Now, about the 50-odd hour spree of next-clicking...
History is path dependent, and any optimal solution to a problem (or apparently optimal, on theoretical economic grounds) may not be reachable given the previous states of the system.
Have to click next for 50-hours? Probably because the real, physical class takes 50-ish hours to cover the material.
Why have a class at all? Why not just have an exam? (Anyone here familiar with the various industrial certification exams around? Trust 'em?) The exam is also likely pretty simple, otherwise you have no brokers and the insurance sales system becomes very expensive. (Has anyone reading this passed the bar?) So consider it from a liability standpoint: with a class and an exam, a "reasonable person" can be "assured" that the broker has been exposed to the appropriate information and has understood it adequately.