National Agent License Bill Introduced

The bill has the support of the Independent Insurance Agents and Brokers of America, the largest property-casualty trade group, and the National Association of Insurance Agents and Financial Advisors, which represents life/health insurance agents and brokers.

It was introduced by Rep. David Scott, D-Ga., and Rep. Randy Neugebauer, R-Texas. The bill has strong bipartisan support. More than 30 members of the House signed on as original cosponsors, according to officials at the two trade groups.

Brett Nilsson, chairman of the IIABA, said the bill "would achieve much needed reciprocity in producer licensing and help policyholders by permitting greater competition among NARAB members."

In a statement, NAIFA President Cliff Wilson added that, "…in today's increasingly mobile world, it is a disservice to insurance consumers to have a regulatory system in place that makes it difficult for a consumer to retain their agent when they move to another state."

The bill makes NARAB membership optional and does not create a federal regulator for insurance or aim to reduce current agent licensing standards, officials of both the IIABA and NAIFA said.

Those who choose NARAB membership would be governed by NARAB's continuing education requirements, and no state other than a producer's home state could impose additional continuing education requirements, the officials said.

The bill creates a governing board consisting of 11 members to be appointed by the president with the advice and consent of the Senate.

Six members of the NARAB Board would be state insurance commissioners, and the remaining five members would be marketplace representatives of producer and carrier groups.

Agents applying for membership would have to pay fees as established by the NARAB Board to join.

Under the bill, nonresident states would continue to have the power to discipline NARAB-licensed producers and to suspend their licenses.

Officials of the two groups said that under the bill, the NARAB board would coordinate disciplinary efforts with the states and establish a consumer complaints office, and could seek court orders to enforce its disciplinary actions when necessary.

Mr. Nilsson said that although the current state-based regulatory system "worked effectively" to ensure insurer solvency and look after policyholders, "the system does need improvement in the area of agent licensing."

He added, "NARAB II would reform and improve the current state-based system of insurance regulation by providing one-stop, nonresident licensing reciprocity."

Mr. Nilsson also said NARAB II "would build upon regulatory experience at the state level, promote consistency and preserve marketplace responsiveness."

He mentioned that similar legislation, H.R. 5611, passed the full House in September 2008 with over 50 cosponsors from both parties, but failed to move in the Senate.

Mr. Wilson said life insurance agents need the bill because varying licensing compliance requirements from state-to-state make it unnecessarily burdensome to follow a client to another state when he or she moves.

"As a result, NAIFA members frequently have to refer their clients to another agent," he added.