Update: IRI issued a statement after NARAB II was added to TRIA bill.
The House Financial Services Committee today reported legislation to the House floor that includes provisions creating a clearinghouse aimed at streamlining agent licensing. Legislation establishing the National Association of Registered Agents and Brokers (NARAB) was added to a bill reauthorizing a federal backup for terrorism risk Thursday by unanimous consent during debate on various pieces of legislation, and the entire bill was sent to the House floor by a vote of 32-27. The bill H. R. 4871 is also known as the TRIA Reform Act of 2014.
However, the strong opposition stemmed from cutbacks proposed in the terrorism risk program, not to creation of NARAB. That bill has strong legislative as well as industry support. However, during debate on the bill Thursday, Rep. Ed Royce, R-Calif., did voice concern that the bill gives too much power to the National Association of Insurance Commissioners (NAIC), a non-governmental body, to advise presidents in picking members of the governing body of NARAB.
And officials of the National Association of Professional Association of Insurance Agents (PIA) said it didn’t like that the Federal Insurance Office (FIO) said it will monitor NARAB “consistent” with its authority to oversee the insurance industry.
John Nichols, National Association of Insurance and Financial Advisors (NAIFA) president, said the passage of the NARAB title “is a win for insurance agents and brokers, but more importantly it’s a win for consumer.” He said that relationships “forged between agents and their clients are important and often last for decades.”
“These relationships are built on trust, consumer confidence, and superior service,” Nichols said. “They shouldn’t have to end simply because a client moves to a different state. Under the bill, if your agent is a NARAB member and you move to another state, then you can keep your agent.”
Cathy Weatherford, president and CEO of the Insured Retirement Institute (IRI), thanked the committee for including the NARAB provision in the terrorism risk reauthorization legislation, “on behalf of our 150,000 financial advisors, our broker-dealer members, and the entire insured retirement industry.”
She said including the bill “recognizes the importance of establishing an efficient insurance licensing process for financial professionals operating in multiple states.” She added that NARAB II would remove a regulatory barrier that impedes broker-dealers’ ability and financial advisors’ willingness to sell lifetime income products. “At the same time, this commonsense legislation maintains important consumer protections and preserves each state’s authority to regulate the insurance marketplace.”
“Securing passage of NARAB II remains one of IRI’s top legislative priorities, and we will continue to work with congressional leaders to achieve this goal,” Weatherford added.
But Jon Gentile, PIA national director of federal affairs, said that while PIA supports creation of NARAB, he is concerned that the FIO has said that it will monitor its establishment and implementation “consistent with its [the FIO’s] authority.” “PIA believes the FIO has no such authority, and that authority for NARAB II should never be granted to the FIO. We look forward to working with the full Senate and House to pass a long-term reauthorization of TRIA as soon as possible,” Gentile said.
Rep. David Scott, D-Ga., called the bill “long overdue,” noting that he has been working 12 years to enact it.
There is likely to be an effort to get the bill through the full House before it leaves for the July 4th recess, but while the TRIA provisions may face amendment on the House floor, the NARAB provision is unlikely to be changed. The bill has already passed the full House several times, and the current version was passed by the Senate Jan. 30 as part of the Senate effort to slow down imposition of actuarial rate increases on customers of the National Flood Insurance Program (NFIP). The House, however, ultimately passed an entirely different NFIP rate rollback scheme that didn’t include the NARAB provisions.