Agency Licensing Reform Battle Is Far From Complete

The National Association of Insurance Commissioners earlier this month officially certified that 35 jurisdictions have met the agency licensing reciprocity standards established under the Gramm-Leach-Bliley Act–six more than the minimum necessary.

Under GLB, unless that minimum of 29 had met standards providing for reciprocal treatment of nonresident producers by Nov. 12, a federal takeover of licensing procedures would have ensued through the creation of a National Association of Registered Agents and Brokers.

While clearing the required hurdle of 29, and then some, might seem like an accomplishment for those devoted to keeping licensing strictly a state-based affair, we are still nowhere near having a nationwide, uniform agent licensing system in place. Thats because several of the largest licensing jurisdictions have not yet complied with NARAB reciprocity provisions, as the Council of Insurance Agents and Brokers noted.

Indeed, CIAB pointed out that four of the largest states–California, Florida, New York, and Pennsylvania–have failed to take action to permit reciprocal licensing, accounting for nearly 30% of the market.

In other words, while the letter of GLB might have been met in surpassing the 29-jurisdiction standard, the spirit of the law has still not been fulfilled. The whole point was to establish nationwide uniformity and reciprocity in producer licensing. That goal has yet to be met.

The CIAB was diplomatic, even gracious in its response to this turn of events. The group congratulated the states certified by the NAIC, and commended NAIC President Terri Vaughan and Vice President Mike Pickens for their leadership on the producer licensing issue. They also credited the National Conference of Insurance Legislators, and individual state lawmakers, for making producer-licensing reform a priority issue.

However, CIAB President Ken A. Crerar pointed out that there is much more work to be done before any real victory can be declared in the battle to reform agency licensing laws. “While great strides have been made over the past few years to streamline and simplify the nonresident producer licensing system, some large hurdles remain,” he said.

He said until this “licensing quagmire is fixed, multistate producers will continue to face problems in getting licensed in all licensing jurisdictions–problems that divert productivity from the business of serving consumers.”

It is clear that neither agents nor insurers can afford to take anything for granted when it comes to licensing reform. Both must lobby relentlessly to make sure all can enjoy the efficiencies and cost savings that uniform licensing standards have to offer.

Kudos To MassMutual

A new program from MassMutual called LifeBridge has given us a genuinely warm glow about the industry.

Under this program, the insurer is going to provide up to 20,000 term policies worth $50,000 each to low-income working parents so that in the event of their death their childrens college education would be ensured.

This is so imaginative and so beneficial a program that its almost amazing no one has come up with something like it before.

We have long felt and stated that the industry is a model corporate citizen, but one who sees many of its good actions go unsung.

With one bold, innovative stroke, a major life insurer has shown the world where the industrys heart is.

We hope this gets a tremendous amount of publicity.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 30, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.