Agent and broker groups voiced strong support at a Senate hearing today for legislation that would create a streamlined non-resident producer licensing system.
The proposed legislation “would strengthen state-insurance regulation, reduce unnecessary redundancies and regulatory costs, and enable the industry to more effectively serve the needs of insurance buyers – and it would achieve these results without displacing or adversely affecting state regulatory oversight,” said Jon Jensen, president of Correll Insurance Group, Spartanburg, S.C. and chairman of the Government Affairs Committee of the Independent Insurance Agents and Brokers of America.
“Nonresident producer licensing is a growing bureaucratic issue for me and my colleagues,” added Scott Trofholz, president and CEO of Harry A. Koch Company, Omaha, Neb., testifying on behalf of the Council of Insurance Agents and Brokers. “We believe that creation of National Association of Registered Agents and Brokers is the best means through which we can achieve comprehensive producer licensing reform.”
And, based on revisions to prior versions of the legislation, an official of the National Association of Insurance Commissioners also voiced support.
“Today’s bill contains improvements over versions introduced in previous Congresses, and hopefully with support from both regulators and producers, it will continue to attract bipartisan co-sponsors and votes as it works its way through the legislative process,” said Monica J. Lindeen, Montana state auditor, securities and insurance commissioner and NAIC vice president.
“The NAIC recognizes that streamlined non-resident producer licensing is an important goal, but I want to emphasize that efforts to do so must not undermine current state authorities to protect insurance consumers and take enforcement action against malfeasant producers,” Lindeen said.
The legislation is S. 534, the National Association of Registered Agents and Brokers Reform Act of 2013. It was introduced in the Senate last week by Sen. John Tester, D-Mont., and Sen. Mike Johanns, R-Neb.
Companion legislation, H.R. 1155, has been introduced in the House by Rep. Randy Neugebauer, Tex., and Rep. David Scott, D-Ga..
The hearing was held by the Securities, Insurance and Investment Subcommittee of the Senate Banking Committee. Tester is chairman and Johanns ranking minority member of the panel.
Johanns said at the hearing, “I would think insurance agents arose the country would be desperately clamoring for something like this.”
In his testimony, Jensen said state laws requiring insurance agents and brokers to be licensed in every jurisdiction in which they conduct business “forces most producers today to comply with inconsistent standards and duplicative licensing processes.”
He added that these “requirements are costly, burdensome and time consuming, and they hinder the ability of insurance agents and brokers to effectively address the needs of consumers.”
Jensen said, “Targeted federal legislation can overcome the structural impediments, collective action challenges, and other practical and political barriers that have stalled previous reform efforts.”
Trofholz added CIAB believes “that creation of NARAB is the best means through which we can achieve comprehensive producer licensing reform.”
Baird Webel, a specialist in financial economics at the Congressional Research Service, said during questioning that creating the NARAB system would lead to increased competition in the insurance industry.