Strong support for legislation that would create a streamlined nonresident producer licensing system was voiced today at a Senate hearing by officials representing the insurance industry’s primary agent and broker trade associations.
And, the Insurance Retirement Institute, which represents life insurers who sell tax-advantaged products, released a study in connection with the hearing indicating that maintaining state insurance licenses across multiple jurisdictions is a regulatory obstacle that may impede the sale of retirement income products.
The IRI said its study found that, “Considering that most financial advisors, 83 percent, are licensed in multiple states, the redundant processes are viewed as a burden to financial advisors.”
“Time spent on redundant licensing requirements is time not spent servicing clients and focusing on their needs,” said IRI President and CEO Cathy Weatherford.
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“The time has come to advance NARAB II. This bipartisan and common-sense legislation promotes the efficient and cost-effective licensing of thousands of financial advisors across the country, while maintaining important consumer protections.”
She urged Congress in her statement to support and advance this legislation to establish a streamlined licensing process, and at the same time, retain states’ authority to regulate the marketplace.”
In another statement released in connection with the hearing, Rob Smith, president of the National Association of Insurance and Financial Advisors, said NAIFA “encourages and supports” enactment of what is now called “NARAB II.”
Smith said the legislation is “a common-sense approach to eliminate the duplicative and burdensome state-by-state non-resident licensing.”
He said the legislation “will be a win for insurance consumers and for agents both, reducing unnecessary costs and establishing standards that exceed existing requirements.”
Baird Webel, a specialist in financial economics at the Congressional Research Service, also testified at the hearing. He said during questioning that creating the NARAB system would lead to increased competition in the insurance industry.
During questioning, Webel sought to reassure members of the committee that the bill “is not a not a federal takeover of the [insurance regulatory] system.”
But, he acknowledged, “that there are insurance legislators out there in the country that do not trust the federal government that much.”
In other testimony, property and casualty trade groups also expressed strong support.
“The foundation of state regulation remains strong and offers considerable benefits, but the difficult truth is that sufficient progress on producer licensing reform and similar marketplace access issues has not been achieved,” said Jon Jensen, president of Correll Insurance Group, Spartanburg, S.C. and chairman of the Government Affairs Committee of the Independent Insurance Agents and Brokers of America.
“The need for effective licensing reform is greater than ever,” he said.
The legislation is S. 534, the National Association of Registered Agents and Brokers Reform Act of 2013. It was introduced in the Senate last week by Sens. John Tester, D-Mont., and Mike Johanns, R-Neb.
Companion legislation, H.R. 1155, has been introduced in the House by Reps. Randy Neugebauer, Tex., and David Scott, D-Ga..
The hearing was held by the Securities, Insurance and Investment Subcommittee of the Senate Banking Committee. Tester is chairman and Johanns ranking minority member of the panel.