Agency Licensing Reform Battle Is Far From Complete

The National Association of Insurance Commissioners this month officially certified that 35 jurisdictions have met the agency licensing reciprocity standards established under the federal Gramm-Leach-Bliley Act–six more than the minimum necessary.

Under GLB, unless that minimum of 29 had met standards providing for reciprocal treatment of non-resident producers by Nov. 12, a federal takeover of licensing procedures would have ensued through the creation of a National Association of Registered Agents and Brokers.

While clearing the required hurdle of 29, and then some, might seem like an accomplishment for those devoted to keeping licensing strictly a state-based affair, we are still nowhere near having a nationwide, uniform agent licensing system in place. That's because several of the largest licensing jurisdictions have not yet complied with NARAB reciprocity provisions, noted the Council of Insurance Agents and Brokers, which came up with the NARAB concept long before GLB was introduced.

Indeed, CIAB pointed out that four of the largest states–California, Florida, New York, and Pennsylvania–have failed to take action to permit reciprocal licensing, accounting for nearly 30 percent of the market.

In other words, while we might have met the letter of GLB in surpassing the 29-jurisdiction standard, the spirit of the law has still not been fulfilled. The whole point was to establish nationwide uniformity and reciprocity in producer licensing. That goal has yet to be met.

The CIAB was diplomatic, even gracious in its response to this turn of events. The group congratulated the states certified by the NAIC, and commended NAIC President Terri Vaughan and Vice President Mike Pickens for their leadership on the producer licensing issue. They also credited the National Conference of Insurance Legislators, and individual state lawmakers, for making producer-licensing reform a priority issue.

However, CIAB President Ken A. Crerar pointed out that there is much more work to be done before any real victory can be declared in the battle to reform agency licensing laws. “While great strides have been made over the past few years to streamline and simplify the non-resident producer licensing system, some large hurdles remain,” he said.

He added that until this “licensing quagmire is fixed, multistate producers will continue to face problems in getting licensed in all licensing jurisdictions–problems that divert productivity from the business of serving consumers.” He said his group looked forward “to sustained momentum over the next several years to break down the remaining licensing barriers facing our nations multistate insurance producers.”

Meanwhile, the NAIC might have opened a can of worms this month that everyone thought had been sealed for good by permitting changes in the agency appointment process to be reexamined.

It is clear that neither agents nor insurers can afford to take anything for granted when it comes to licensing reform. Both must lobby relentlessly to make sure that all can enjoy the efficiencies and cost savings that uniform licensing standards have to offer.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 23, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Agency Licensing Reform Battle Is Far From Complete

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