WASHINGTON BUREAU — House members today introduced a bill, H.R. 2554, that would create the National Association of Registered Agents and Brokers.
The bill has the support of the Independent Insurance Agents and Brokers of America, Washington, a property-casualty trade group, and the National Association of Insurance and Financial Advisors, Falls Church, Va., a group that represents life and health producers.
The bill, dubbed “NARAB II,” would provide for streamlined non-resident insurance agent and broker licensing.
The bill would preserve state insurance regulation and consumer protection provisions, and it would require agents applying for NARAB membership to submit to a criminal background check.
Today, only 17 states require a federal criminal background check for producers.
The bill was introduced by Reps. David Scott, D-Ga., and Randy Neugebauer R-Texas. The bill has strong bipartisan support. More than 30 members of the House signed on as original cosponsors, according to representatives of the IIABA and NAIFA.
C. Brett Nilsson, chairman of the IIABA, says the bill “would achieve much needed reciprocity in producer licensing and help policyholders by permitting greater competition among NARAB members.”
NAIFA also is welcoming introduction of the bill.
“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,” NAIFA President Cliff Wilson says.
The bill makes NARAB membership optional and does not create a federal regulator for insurance or aim to reduce current agent licensing standards, officials of the IIABA and NAIFA say.
Producers who choose NARAB membership would be governed by NARAB’s continuing education requirements, and no state other than a producer’s home state could impose additional continuing education requirements, the officials say.
The bill creates a governing board consisting of 11 members to be appointed by the president with the advice and consent of the Senate.
The NARAB board would include 6 state insurance commissioners, and the remaining 5 members would be representatives of producer and carrier groups.
Agents applying for NARAB membership would have to pay fees set by the NARAB board.
Under the bill, non-resident states would continue to have the power to discipline NARAB-licensed producers and to suspend their licenses.
Officials of the two groups said that under the bill, the NARAB board would coordinate disciplinary efforts with the states and establish a consumer complaints office. The board also could seek court orders to enforce its disciplinary actions when necessary.
Athough the current state-based regulatory system “worked effectively” to ensure insurer solvency and look after policyholders, “the system does need improvement in the area of agent licensing,” Nilsson says. “NARAB II would reform and improve the current state-based system of insurance regulation by providing one-stop, non-resident licensing reciprocity.”
Nilsson says NARAB II “would build upon regulatory experience at the state level, promote consistency, and preserve marketplace responsiveness.”
A similar bill, H.R. 5611, passed the full House on suspension in September 2008, with more than 50 cosponsors from both parties, Nilsson says.
Wilson says life insurance agents need the bill because varying state licensing compliance requirements make it unnecessarily burdensome to follow a client to another state when the client moves.
“As a result, NAIFA members frequently have to refer their clients to another agent,” Wilson says.