Members of the House Financial Services Committee capital markets subcommittee today approved bills that could streamline multi-state agent licensing and create a federal insurance office.
The subcommittee passed H.R. 5611, the National Association of Registered Agents and Brokers Reform Act, and H.R. 5840, the Insurance Information Act, by a voice vote.
H.R. 5840, a bill that would create an Office of Insurance Information inside the U.S. Treasury Department, was introduced by Rep. Paul Kanjorski, D-Pa., the chairman of the subcommittee.
The bill promotes “an idea that I have long held, that the federal government should have an in-house expert on insurance issues,” Kanjorski said.
Kanjorski introduced an amendment in an effort to address the concerns of the bill’s critics.
The amendment would create a role for the National Conference of Insurance Legislators, Troy, N.Y., on the OII advisory board, and it would narrow the authority of the OII to pre-empt state laws to “very narrow circumstances and with a very detailed procedure,” Kanjorski said.
Rep. Chris Shays, R-Conn., said the bill strikes a “careful balance” between those who believe in federal oversight and those who want to keep insurance regulated by the states.
Carrier and agent groups are supporting the bill.
Frank Keating, president of the American Council of Life Insurers, Washington, welcomed passage of H.R. 5840.
The bill “would, at long last, establish an advisory body that can analyze the impact of tax, retirement security, trade and economic legislation on insurance consumers, and do so on a national and an international basis,” Keating says in a statement.
The National Association of Insurance and Financial Advisors, Falls Church, Va., sent panel members a letter saying a review of insurance regulatory reform proposals demonstrates the need for the bill.
During the review, “it became clear that there is a fundamental lack of understanding at the federal level regarding issues that impact professional agents and the industry on a national and international scale,” NAIFA President Jeffrey Taggart and NAIFA Chief Executive John Healy write in the letter. “Currently there are 14 federal agencies that have a role in regulating insurance, and yet there is no central body of expertise at the federal level to provide advice and council to the administration and Congress on policy matters impacting the insurance industry.”
H.R. 5611 would revive efforts to create a National Association of Registered Agents and Brokers, a national organization for licensing producers.
The bill, introduced by Reps. David Scott, D-Ga., and Geoff Davis, R-Kent., is a new version of a concept included in the Gramm-Leach-Bliley Financial Services Modernization Act nearly a decade ago.
That bill used the threat of the creation of NARAB as a tool to persuade states to adopt uniform and reciprocal producer licensing arrangements.
Scott said H.R. 5611 has been changed to give state regulators a slim majority on the board that would oversee NARAB.
The bill also was changed to ensure that it would not reduce state producer licensing revenue, Scott said.
“The need to streamline the non resident licensing process is important for NAIFA members, who frequently relinquish clients when they move to another state because of the burdens imposed by multistate licensing,” Taggart and Healy write in the NAIFA letter to capital markets subcommittee members.
Licensing differences can cause problems when clients buy a product such as long term care insurance in one state, then retire to another state and have trouble using the product later in life, Taggart and Healy write.
Rep. Jackie Speier, D-Calif., expressed some concern about the NARAB bill.
Non-resident producers are not going to be prepared for California’s system of consumer protection without being required to study it, Speier said.