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NARAB II introduced in House and Senate

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Bipartisan legislation to introduce National Association of Registered Agents & Brokers Act of 2013 (NARAB II), which would streamline the insurance agent licensing process legislation has been introduced in both the House and the Senate with a Senate Hearing scheduled for next week, a watershed legislative event for the insurance agent industry.

In the House, Rep. Randy Neugebauer, R-Texas, joined Rep. David Scott, D-Ga., to introduce the bill to create a national agent/broker licensing entity for nonresident licensing on a multistate level.

The House of Representatives has approved NARAB twice now, but this is a milestone for the entity, as it is now being championed in the Senate by Sens. Jon Tester, D-Mont., and Mike Johanns, R-Neb.

The new licensing entity, if created by law, would be governed by a 13-member panel of state regulators and insurance industry representatives. 

“The NARAB Reform Act will protect consumers, while also allowing for greater relief for those in the insurance industry who have struggled under burdensome regulations. I urge my House colleagues to support this legislation in order to modernize the system currently in place,” Scott stated.

Neugebauer and Scott said they drafted H.R. 1064 to maintain the successful state-based system of insurance regulation while improving consistency and streamlining procedures from state to state.

The NARAB reform act only relates to marketplace entry and would not impact the day-to-day state regulation of insurance. NARAB would not be part of, or report to, any federal agency and would not have any federal regulatory power, supporters assured.

However, the new system would bring “much-needed reciprocity in producer licensing through a board of state commissioners and industry representatives,” the bill’s sponsors stated. 

The legislation also would provide higher and more consistent national consumer protections for those agents utilizing NARAB, its supporters say, as well as preserve the rights of states to supervise and discipline agents and brokers.

“We write today on behalf of the National Association of Insurance Commissioners (NAIC) in support of the National Association of Registered Agents and Brokers Reform Act of 2013,” the NAIC leadership wrote March 8 to the Congressional sponsors of the legislation. 

“Agents and brokers play an important role in the insurance marketplace by ensuring consumers are able to obtain insurance products that best fit their needs. State regulators’ authority and oversight over agents and brokers provide critical protections to consumers of insurance products. The NARAB II legislation preserves these protections and provides appropriate measures for implementation of the NARAB, an entity already referenced in the Gramm-Leach Bliley Act,” wrote the NAIC leadership led by Jim Donelon, NAIC president and Louisiana insurance commissioner. 

Agent groups in life insurance and property/commercial lines were all quick to come out in favor of the legislation, having smoothed out the politics of state-versus-federal insurance regulation over the past decade and a half. 

The current state regulatory system has worked effectively to maintain insurer solvency and protect consumers. However, the state-based system needs agent licensing reform, according to insurance agents of all stripes, some holding out hope that this is the time and place to get the long-awaited legislation passed once and for all.

“It’s difficult to imagine a better team of champions than Congressmen Neugebauer and Scott and Sens. Tester and Johanns. For a lot of reasons, we think that this is the session of Congress where we are most likely to reach the finish line on the long-held goal of creating a uniform nonresident agent licensing clearinghouse,” stated Ken Crerar, president of the Council of Insurance Agents and Brokers (CIAB), which has almost been synonymous with NARAB over the years.

“When we set out on this goal back in the early 1990s, there was little industry cohesion. Today, the industry is united. We feel a good bit of momentum and comity on this issue. This isn’t like horseshoes or hand grenades: close doesn’t count. We need to get this over the finish line,” Crerar stated.

CIAB first formed a task force to work on interstate nonresident producer licensing back in the 1930s.

“It’s time we finish the job,” Crerar said.

Insured Retirement Institute (IRI) President and CEO Cathy Weatherford noted that the bipartisan legislation promotes the efficient and cost-effective licensing of thousands of financial advisors across the country, while maintaining important consumer protections.

“We urge all members of Congress to support and advance this common-sense legislation to secure its promise of an improved and streamlined licensing process while retaining authority for the states to regulate the marketplace,” Weatherford stated.

NARAB II legislation would establish a one-stop, national licensing clearinghouse for financial professionals operating in multiple states. It would enable financial professionals who have passed background checks in their home state to apply for NARAB membership, allowing them to conduct business in other jurisdictions and bypass the burden of duplicative state licensing requirements across multiple states.

Rob Smith, president of the National Association of Insurance and Financial Advisors (NAIFA), said that NARAB II “encourages and supports this common-sense approach to eliminate the duplicative and burdensome state-by-state non-resident licensing. This will be a win for both insurance consumers and for agents, reducing unnecessary costs and establishing standards that exceed existing requirements.”

“NARAB II is critical for the tens of thousands of Big ‘I’ members who operate on a multi-state basis,” says Robert Rusbuldt, the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”)president & CEO. “By providing a mechanism for establishing true nonresident licensing reciprocity, this legislation would improve licensing while ensuring that states retain the authority to regulate marketplace activity and enforce important consumer protection laws. As our members come to Washington, D.C. next month for our annual Legislative Conference, they will be meeting with members of Congress to urge them to support NARAB II.”


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