Agency Licensing Reform Battle Is Far From Complete

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.”