NU Online News Service, March 2, 3:46 p.m. EST
The National Association of Registered Agents and Brokers reform act, that would in effect create national licensing for producers, is scheduled for a vote tomorrow in the U.S. House of Representatives.
The bill, commonly known as NARAB II (H.R. 2554), is an amendment to Gramm-Leach-Bliley to reestablish the national registration of insurance agents as a nonprofit corporation to allow for agent reciprocity.
Under the terms of the bill, an insurance producer would be allowed to conduct insurance business in any state in any line of insurance specified in the producer’s home state. That would also include claims adjustment and settlement, risk management and “specified insurance-related consulting activities.”
States would retain their regulatory jurisdiction over consumer protection, market conduct and unfair trade practices. They also would retain their rights over licensing, supervision, disciplining, and setting of licensing fees for insurance producers.
NARAB would coordinate with state insurance regulators to establish a central clearinghouse and the creation of a national database for “the collection of regulatory information concerning the activities of insurance producers.”
NARAB will still need to establish the criteria for membership, including a criminal background check and a procedure to deny membership to a state licensed insurance producer on the basis of criminal history.
The original NARAB reciprocity plan under Gramm-Leach-Bliley Act of 1999 would have been triggered if enough states had not demonstrated reciprocity licensing laws. However, some of the major insurance markets, such as New York, never established licensing reciprocity.
Gramm-Leach-Bliley removed barriers between financial institutions, which critics contend led to the recession of 2008-2009.
Joel Wood, senior vice president for Government Affairs for the Washington, D.C.-based Council of Insurance Agents & Brokers said the association was very happy to see the bill reach the floor.
“We’ve been working on licensing reciprocity–uniformity since the 1930′s literally, so this is needed,” he said. “The original NARAB provisions were helpful in motivating the states to enact reciprocity laws, but the pace of reform has not kept up with the pace of marketplace convergence and nationalization.
“Everyone has an ideal regulatory reform, but the perfect shouldn’t prevent the good,” he said in an e-mail. “This is really good and we hope the Senate gets there as well.”