Legislation approved July 10 by a House Financial Services Subcommittee would streamline multi-state agent licensing and establish an official insurance presence in Washington.
The legislation is now expected to go directly to the House floor, according to industry lobbyists and congressional staffers.
But, due to the congressional effort to deal with the housing and financial crisis, floor action might be delayed until Congress returns from its August break in early September, officials say.
The National Association of Registered Agents and Brokers Reform Act, or H. R. 5611, and the Insurance Information Act, H.R.5840, were passed via a voice vote by the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.
The OII bill was introduced by the subcommittee’s chairman, Rep. Paul Kanjorski, D-Penn., who noted that it “promoted an idea that I have long held, that the federal government should have an in-house expert on insurance issues.”
Rep. Kanjorski offered an amendment making changes designed to assuage the concerns voiced by some critics of the bill. The amendment created a specific role for the National Conference of Insurance Legislators, Troy, N.Y., on the OII’s advisory board, and language giving the OII authority to pre-empt state laws was clarified to apply, he said, under “very narrow circumstances and with a very detailed procedure.”
Rep. Chris Shays, R-Conn., said the bill struck a “careful balance” between those who believe in federal oversight and those who would keep insurance regulated by the states.
Both carriers and agents’ groups have offered their support for the bill.
Frank Keating, president of the American Council of Life Insurers, Washington, praised the OII bill’s passage as addressing a “vital policy gap” given the national and increasingly global nature of the insurance marketplace and the economy in general.
“By creating a federal Office of Insurance Information, H.R. 5840 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,” he said. “The decisions made in Washington affect all insurance consumers regardless of where they live, and it is time the federal government developed the institutional expertise to evaluate insurance-related legislation on a national basis.”
In a letter to panel members, the National Association of Insurance and Financial Advisors, Falls Church, Va., saw a need for the bill based on a review of the current slate of insurance regulatory reform proposals.
“During that 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,” wrote NAIFA president Jeffrey Taggart and chief executive officer John Healy. “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.”
Commenting on the legislation that would create an Office of Insurance Information within the Treasury Department, the Association for Advanced Life Underwriting, Falls Church, Va., said it sees creating the new office as an important first step toward an optional federal charter.
“AALU supports the concept of optional charter legislation and our engagement in the lengthy legislative process is important to try to ensure that that legislation facilitates, promotes, and appropriately regulates the role that we play for Americans,” stated AALU CEO David Stertzer.
“With uncertainty confronting many segments of the financial markets, the essential nature of the stability, protection and savings provided by the life insurance industry and by AALU members and other life insurance producers are more important than ever,” said AALU President Mike Corry. “Because of this critical role, the manner in which carriers and producers are regulated is increasingly important,” he commented.
Commenting on the legislation, the Association for Advanced Life Underwriting said it sees creating the new office as an important first step toward an optional federal charter.
The second bill approved by the subcommittee revives the NARAB concept for ensuring reciprocal licensing of agents originally conceived of in the Gramm-Leach-Bliley act nearly a decade ago.
It was introduced by Rep. David Scott, D-Ga., and Geoff Davis, R-Kent., and both noted that it had drawn significant support from both sides of the aisle, as well as a myriad of state insurance regulators and agents’ groups.
Rep. Scott noted that the bill had been changed to give state regulators a majority, albeit a slim one, on the board tasked with overseeing NARAB, and also noted that the bill was clarified to ensure that state revenues from licensing fees would not be reduced under the bill.
Rep. Davis said that his experience showed the need for the legislation when as a small business owner he tried to find a single policy covering several employees across multiple states. “Nearly 10 years after Gramm-Leach-Bliley, we’re still in need of progress on this issue,” he said.
The NAIFA leadership also pointed to the need for greater efficiency in multi-state licensing.
“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,” wrote Taggart and Healy in the letter.
The 2 argued that NAIFA members provide services to help clients deal with many of the potential problems that can occur later in life, such as long-term illness or ensuring financial security during retirement, but doing so can be difficult if a client moves to a different state.
“As a result, our members frequently have to refer their clients to another agent,” the NAIFA leaders said, adding that the NARAB bill is “necessary because, in today’s increasingly mobile world, it is a disservice to insurance consumers to have a regulatory system in place that makes it difficult for a consumer to retain their agent when they move to another state.”
However, Rep. Jackie Speier, D-Calif., voiced some concern regarding the bill, noting that non-resident producers, “are not going to be prepared” for her state’s system of consumer protection without being required to study it and be tested beforehand.