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Monday, April 22, 2013

Why National Producer Licensing? A Summary of NARAB II

Posted by: ABIA Outside Counsel Chrys Lemon and Adam Maarec, McIntyre & Lemon, PLLC

The National Association of Registered Agents and Brokers Reform Act of 2013 (NARAB II) was introduced with bipartisan support in both houses of Congress this March. The bill, like the version introduced in 2011, would streamline the licensing requirements for insurance producers (individuals and business entities) operating in multiple states.

Recall that under current law created by the Gramm-Leach-Bliley Act a similar National Association of Registered Agents and Brokers exists. However, that NARAB is contingent upon the NAIC finding that states have failed to enact sufficient uniformity or reciprocity provisions. The NAIC has, pursuant to GLBA’s provisions, determined that states have adopted sufficient uniformity and/or reciprocity provisions and prevented GLBA’s NARAB provisions from taking effect. NARAB II, on the other hand, would establish a non-profit National Association of Registered Agents and Brokers two years after the bill becomes law.

There appears to be significant support from both sides of the aisle in both the House of Representatives and the Senate, which past versions of the bill did not enjoy. Rep. Randy Neugebauer (R-TX), Chairman of the House Financial Services Committee Subcommittee on Housing and Insurance and sponsor of the House bill, said “[t]he NARAB Reform Act will create a more efficient, modern, and workable system of insurance agent licensing [and allow] for more competition between insurance agents and brokers, which ultimately means more choices and better prices for consumers purchasing insurance policies.” A House co-sponsor, Congressman David Scott (D-GA), “urge[d] [his] House colleagues to support this legislation in order to modernize the system currently in place.”

Sen. Jon Tester (D-MT) said “[t]his common sense legislation would set rigorous professional and consumer protection standards and both Senator Johanns [R-NE] and I want to see it signed into law." The NAIC is also supportive of the legislation. Monica Lindeen, the Montana State Auditor and NAIC Vice President, testified at a Senate hearing in favor of the bill and stated at an industry event that passage of the bill was 99% certain.

The ABIA has long supported a national producer licensing system and is actively working to ensure this bill becomes law. We will keep the ABIA membership apprised of the status of this important legislation.

ABIA has formed a working group to continue to push for changes to producer licensing. We need your involvement to write letters to your congressmen and senators and to come to Washington to advocate for these changes. Contact ABIA now to help advance this effort.

Read the House bill.
Read the Senate bill.

Read summary of the legislation. (ABIA Members Only)