The Time is Now for Agent Licensing Reform

Excitement is building for critical legislation, the “National Association of Registered Agents & Brokers (NARAB II) Reform Act.” The Independent Agents & Brokers of America (Big “I”) strongly supports this bill that streamlines nonresident licensing of agents and brokers to better serve consumers.

The bipartisan bill was introduced by Insurance Subcommittee Chairman Jon Tester, D-Mont., and Ranking Member Mike Johanns, R-Neb., in the U.S. Senate (S. 534) and Insurance Subcommittee Chairman Randy Neugebauer, R-Texas, and Rep. David Scott, D-Ga., in the House (H.R. 1155). The Big “I” is proud that the Senate and House Insurance Subcommittee Chairs are the lead sponsors of legislation that will benefit so many Main Street businesses.

NARAB II would increase consumer access to insurance markets and allow agents and brokers operating on a multi-state level to avoid duplicative licensing requirements, while maintaining consumer protections. The bill would provide nonresident (beyond one’s home state) insurance agent and broker licensing reform, while preserving the rights of states to supervise and discipline agents and brokers.

The Big “I” has long been concerned that as insurance producers operate and obtain licenses in more jurisdictions, the lack of true reciprocity makes compliance challenging, costly and presents burdens that are detrimental to insurance consumers. The lack of reciprocity has cost both Big “I” members and their clients, and it is important that Congress act to address the problem.

Multi-State Problem

The average multistate Big “I” member operates in at least eight states, and it is not uncommon for agencies to be licensed in 35 to 50 jurisdictions.

NARAB II would be established as a private, nonprofit entity managed by a board of state insurance regulators, and marketplace representatives. The reforms would only apply to marketplace entry. Day-to-day state insurance laws and regulations would not be affected.

The legislation would permit producers who are licensed in good standing in their home state to operate in additional states if they satisfy NARAB membership criteria. Producers could remain licensed in the traditional manner, but those operating in multiple jurisdictions could apply for NARAB membership. For producers operating in multiple states, and those who want to expand their operations, NARAB would create one-stop producer licensing for additional licenses beyond the home state. Agencies also could use this new mechanism to streamline their business entity licensing.

NARAB II would greatly benefit insurance consumers by:

• Easing their access to qualified insurance advisors,
• Providing higher and more consistent national consumer protection standards by establishing membership requirements, and
• Coordinating with states to establish a central clearinghouse for license issuance, and renewal and collection of regulatory information on producer activities.

State-Friendly

The Big “I” is a leading supporter of state regulation of insurance, and strongly opposes any form of federal regulation of the industry. For this reason that, it is critical to note that NARAB II is state-friendly and deferential to states’ rights. NARAB would not have any federal regulatory power, and states would continue to regulate market conduct, consumer protection and other critical functions. Through NARAB, individuals and agencies would pay the appropriate fees required by each state in which they are licensed, thereby not affecting state revenue. As evidence of how NARAB II is deferential to states’ rights, the legislation has the support and endorsement of the National Association of Insurance Commissioners (NAIC).

The Big “I” and the NAIC are pleased to stand side-by-side in support of this common-sense legislation. With overwhelming bipartisan support in both the House and Senate, we are optimistic that NARAB II will soon become a reality.

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