Legislation providing a mechanism for establishing true nonresident licensing reciprocity was reported out of the Senate Banking Committee.
The legislation is S. 534, the National Association of Registered Agents and Brokers Reform Act of 2013. It was introduced in the Senate in March by Sen. John Tester, D-Mont., and Sen. Mike Johanns, R-Neb. It has 22 co-sponsors.
The bill would establish the National Association of Registered Agents and Brokers, a nonprofit, independent board to provide a mechanism for multistate licensing for insurance producers. States would retain their regulatory jurisdiction over consumer protection, market conduct and unfair trade practices, and would retain their rights over licensing, supervision, disciplining and the setting of licensing fees for insurance producers, according to the industry.
“The product before you today represents over a decade worth of effort and I believe, will finally achieve the goals laid out in GLB in a way that ensures that regulators can continue to protect consumers,” Tester said.
(Related story: Debate over fed, state, international rules intensifies)
Praise rained thick from the agents and brokers communities, many of whom have labored over this legislation for years leading up to the vigorous work on smoothing over amendments for the markup Thursday.
“NAIFA is pleased that the NARAB II has passed mark-up, and we look forward to quick action by the Senate on the legislation,” said NAIFA President Rob Smith.
“While insurance is best regulated at the state level, simple market realities mean that many agents have clients in states other than their own,” Smith said.
“This legislation would not only ease multistate licensing burdens on agents, but would help them maintain important relationships with clients and ultimately serve consumers better,” Smith said.
Robert A. Rusbuldt, president & CEO of the Independent Insurance Agents and Brokers of America, added that, “NARAB II is vitally important for tens of thousands of Big ‘I’ members who operate on a multistate basis.”
“This effort has been waged for decades and is now closer than ever to fruition,” said the Council of Insurance Agents & Brokers (CIAB) president and CEO Ken A. Crerar. “We congratulate and thank the Committee for its vote today – in particular, our sponsors Sen. Jon Tester and Sen. Mike Johanns, Committee Chairman Tim Johnson and Ranking Member Mike Crapo – and we hope the full Senate will soon consider the bill.”
“The legislation would provide for streamlined nonresident insurance agent and broker licensing while preserving state insurance regulation and consumer protections,” Rusbuldt said.
Companion legislation, H.R. 1155, has been introduced in the House by Rep. Randy Neugebauer, R-Texas, and Rep. David Scott, D-Ga.
The bill has passed the House in two prior Congresses, and has strong support in that body — strongly increasing the likelihood the bill will be enacted this year despite the fact that Congress is deeply divided.
Sen. Elizabeth Warren, D-Mass., was able to win support for an amendment to the bill that will allow President Obama to appoint five other members of the board, with the stipulation that they “shall have demonstrated expertise and experience with property and casualty and life and health insurance producer licensing.”
“I’m pleased the Banking Committee agreed to this amendment to improve the national insurance licensing bill,” Warren said.
The prior version required those five board members to be “representatives” of those industries rather than merely having experience/expertise.
The issue of state regulatory supremacy came up in an amendment proposed by Sen. Tom Coburn, R-Okla., that would allow states to “opt-out” of NARAB II if the state felt its authority was going to be limited through creation of NARAB. However, the amendment was rejected by the panel.ndment that would potentially allow consuemr itnerests or even federal regualtory stakeholders to be a part of the NARAB vboard.
Under the bill, insurance agents will be able to apply for NARAB membership and become licensed to sell insurance in multiple states, but states will maintain their full authority in regulating the business of insurance.
“This will reduce costs and red tape for insurance agents and brokers who operate in multiple states, and will allow consumers to maintain relationships with their insurance agents if they relocate to another state,” said Sen. Tim Johnson, D-S.D., in praising committee action on the legislation.
“Today’s action is an important step forward for this bipartisan legislation, which promotes the efficient and cost-effective licensing of thousands of financial advisors across the nation,” said the Insured Retirement Institute (IRI) in a statement. “We urge all Members of Congress to support NARAB II and continue to advance this legislation.”
The annual report of NARAB will be sent to the U.S. Treasury Department on its way for review to the president under the bill, although the Federal Insurance Office (FIO), part of Treasury, had wanted to be involved in receiving it, according to sources. The industry reportedly balked a bit at FIO’s direct involvement.
CIAB, which has long supported the creation of a national agent/broker licensing system praised the work from all parties and sides of the aisle, and has seen such legisaltion pass the House twice before but ultimately go nowhere. The fits and starts of the legisaltion were overcome by progress in the Senate this week.
“This has been an inclusive process, and many members of the Senate Banking Committee — from liberal to conservative — helped improve it. Given the number of years it has been under consideration and the rare unanimity of the stakeholders, it also is a delicate compromise,” CIAB’s Crerar stated.