The Coalition for Financial Security is urging Florida Chief Financial Officer Alex Sink to look into the results of the latest state report showing that African-American and Hispanic test-takers passed the state's life insurance licensing exam at rates below other demographic groups.
"The CFO's office has been monitoring these numbers for some time," said Randolph Sergent, a lawyer with Venable LLP and an attorney advisor to CFS on insurance licensing reform issues. "While the state continues to collect information, the data that is coming in suggests reason to be concerned that members of minority communities in Florida may have a higher hurdle to overcome in order to enter the financial services profession. One way to champion the cause of financial security is by looking at the reasons for disparities, why there has been little difference in the numbers for the last two years, and what can be done to see more success from all communities and education levels."
The Florida report, covering calendar year 2008, was released last week. The report shows that 51.7% of white test-takers (1,046 of 2,024) passed the state licensing exam last year. This rate compared with 32.4% of African-Americans (536 of 1,652) and 34.6% of Hispanics (657 of 1,900). The 2008 report was the second annual report to show such disparities.
Also notable in the latest report, according to the coalition, was the table comparing education level and pass rates. Even with the state-mandated 40 hours of pretest study, individuals with a graduate degree passed the exam at a rate of only 54% last year. The pass rate for those with some college experience or those with high school diplomas was even lower, bringing Florida's overall pass rate to 39.9% (2,490 of 6,239).
As a reference, the state of Illinois' 2007 demographics report showed an overall pass rate of 80% (7,639 of 9,549), with those who had a college degree or more passing at 88%. Illinois requires 15 hours of pre-licensing study.
CFS was formed in 2005 in the wake of Hurricane Katrina by a number of organizations and individuals concerned about the growing divide between working-class and wealthy Americans' level of financial security. The coalition's mission is to educate policy-makers and financial providers about this divide and to advocate for effective solutions.
In addition to new policies to increase financial literacy by teaching finance in public schools, CFS supports new solutions that will address a shortage of financial experts in middle-class and minority communities.
Statistics, including a 2005 survey by CFS and LULAC, show that in some communities, there are not enough financial experts who can help their neighbors learn about and secure important financial tools such as 401(k)s, bonds, stocks and life insurance protection. The 2005 CFS/LULAC poll found that two-thirds of white respondents had some life insurance, compared with roughly half of African-American and Hispanic respondents.
The survey suggested that one reason for the disparity was that minority and middle-class respondents did not know anyone who sells life insurance, and had never been contacted about it.
"There are a number of reasons that so many Americans are struggling to achieve financial security," said former New York City Mayor David Dinkins, another member of the CFS advisory board. "The public, private and nonprofit sectors must all do their part. We need more financial education, more recruitment and retention of financial professionals by the financial industry, and more attention to this problem by public officials."