Perennial industry and U.S. House of Representatives favorite, the National Association of Registered Agents & Brokers Act (NARAB II) finally got seeded in the Senate for the first time this week, this time with apparent broad support from different constituencies, including the National Association of Insurance Commissioners.
NARAB II, introduced by Sens. Jon Tester, D-Mont., and Mike Johanns, R-Neb., would establish a federal licensing clearinghouse for insurance agents who operate in multiple states.
The current version protects state interests, for the most part, sources say.
“Streamlining the licensing of registered agents and brokers while maintaining state regulation of the insurance industry will increase competition in the insurance market and better protect consumers,” Tester says. “With the support of both the insurance industry and regulators, my bill will improve the licensing process and provide consumers with a better product at a lower price.”
“There is broad support from both industry and state commissioners for this legislation,” notes Tester’s office. Tester serves on the Senate Banking, Housing and Urban Affairs Committee and chairs Banking’s Economic Policy Subcommittee.
“NARAB II is supported by the major producer trade associations, including the Independent Insurance Agents and Brokers of America (IIABA), the National Association of Insurance and Financial Advisors (NAIFA), and the Council of Insurance Agents and Brokers (CIAB),” states a spokesperson for Tester. “The NAIC endorsed this legislation in 2008 and has also just recently endorsed an updated version of this legislation.”
The NAIC did not provide a statement to the press, but it is clear from sources it supports the bill. Roger A. Sevigny, New Hampshire’s insurance commissioner, was said to have led efforts for the NAIC. However, the NAIC got some concerns settled, as a chance to review, barring those under licensure suspension in any jurisdiction, and increase the number of state commissioners governing it, those familiar with the bill said.
Among the remaining questions: Which if any states will still object (as a clearinghouse, NARAB will have preemptory authority to grant nonresident licenses); and whether there will be any action on the bill in the Senate Banking Committee.
“This bill would greatly improve licensing while ensuring that states retain the authority to regulate marketplace activity and enforce important consumer protection laws,” says Robert A. Rusbuldt, Big “I” president.
“We’re very grateful to Senator’s Tester and Johanns for leading the Senate’s effort on streamlining agent/broker producer licensing regulations,” says Joel Kopperud, director, government affairs, with CIAB. “The introduction of S.2342 is a big step forward, and their leadership on working to create NARAB II is significant to every broker working on a multi-state basis.”
The House has twice before passed versions of NARAB II by wide margins, most recently in March of 2010. A current House version of the legislation, H.R. 1112 by Reps. Randy Neugebauer, R-Texas, and David Scott, D-Ga., has 60 bipartisan cosponsors.
Currently, agents and brokers who serve clients in more than one state must go from state to state, where they do business to fulfill all licensing requirements.
Once approved by NARAB, the agent or producer would be subject to a uniform set of non-resident licensing requirements.
“NAIFA appreciates the efforts of Senator Tester and Senator Johanns to generate momentum for NARAB II,” says NAIFA President Robert Miller. “The bill would go a long way toward removing some of the regulatory hurdles that make it more difficult for insurance agents to serve the American public.”
The burden of meeting varying licensing rules can prove taxing for agents, NAIFA stated. For example, it takes NAIFA members an average of 57 hours each year to satisfy licensing and continuing education requirements, according to a recent survey, said NAIFA, noting that the survey found that 80% of NAIFA members have had to abandon clients who moved to states where the agents were not licensed.
“NAIFA members work personally with their clients and often get to know them and their families very well,” Miller adds. “There’s no good reason these relationships should have to end just because a client moves to a different state.