WASHINGTON–The U.S. House passed by voice vote late Wednesday legislation recreating the National Association of Registered Agents and Brokers.
However, the bill’s hope of being enacted is unclear because there are no signs of support in the Senate, according to industry lobbyists.
The bill is the National Association of Registered Agents and Brokers Reform Act of 2009 or NARAB II (H.R. 2554), which would simplify the producer licensure process.
But the bill has lukewarm support in the insurance industry.
Peter Ludgin, the executive director of Agents for Change, which supports legislation that would create an optional federal charter for insurers, contends that “the legislation does not go far enough and is a piecemeal approach to a system-wide problem.”
Officials of the National Association of Insurance and Financial Advisors called passage of the bill “a step in the right direction” for simplifying agent licensing.
Tom Currey, NAIFA’s president, said the majority of NAIFA members are licensed in multiple states “and keeping up with the licensing requirements of each state are often redundant and costly.”
He said, “NAIFA is proud to support NARAB II because it just makes sense to eliminate unnecessary costs and duplicative regulation that make it more difficult to serve the clients that depend on us.”
The legislation would recreate a provision of the 1999 Gramm-Leach-Bliley Act that was designed to reestablish the national registration of insurance agents as a nonprofit corporation to allow for agent reciprocity.
Under the terms of the bill, an insurance producer would be allowed to conduct insurance business in any state in any line of insurance specified in the producer’s home state.
States would retain their regulatory jurisdiction over consumer protection, market conduct and unfair trade practices. They also would retain their rights over licensing, supervision, disciplining and the setting of licensing fees for insurance producers.
NARAB would coordinate with state insurance regulators to establish a central clearinghouse and the creation of a national database for “the collection of regulatory information concerning the activities of insurance producers.”
According to the bill, NARAB will still need to establish the criteria for membership, including a criminal background check and a procedure to deny membership to a state-licensed insurance producer on the basis of criminal history.
The original NARAB reciprocity plan under Gramm-Leach-Bliley would have been triggered if enough states had not demonstrated reciprocity licensing laws. However, some of the major insurance markets, such as New York, never established licensing reciprocity.
Mr. Ludgin says that recreation of NARAB would be “building on a broken chassis.”
He said that agent licensing is a “costly, time consuming, and burdensome morass, creating unnecessary hoops that producers are forced to jump through to serve their customers.”
He said the bill only “tangentially addresses much-needed licensure reform, but does nothing to address speed to market of products or free market pricing.”