By Arthur D. Postal, Elizabeth D. Festa
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.
“This concept was first developed by Congress in 1999 when it passed Gramm-Leach-Bliley but unfortunately, wasn’t able to achieve the level of reciprocity and uniformity hoped for,” Tester said in asking the committee to support the measure.
“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.
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“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.”
“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.
The bill will establish the National Association of Registered Agents and Brokers, a nonprofit, independent board to provide a mechanism for multistate licensing for insurance producers.
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 in a statement. “We urge all Members of Congress to support NARAB II and continue to advance this legislation.”
Originally published on LifeHealthPro.com