­­­House approves NARAB, insurance agents closer to multi-state licensing

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The House overwhelmingly approved legislation on Tuesday that brings the U.S. closer to multistate licensing for insurance agents.

The House version of the National Association of Registered Agents and Brokers Reform Act of 2013 (H.R. 1155), also known as NARAB II, passed easily in the House by a vote of 397-6.

Cathy Weatherford

Cathy Weatherford

A similar bill in the Senate (S. 534) has already advanced through the Senate Banking Committee, with little opposition to its passage.

If enacted into law, NARAB II would set up a “one-stop shop” for insurance agents, allowing them to more easily sell across state lines nationwide.

NARAB II would create a non-profit to act as a clearinghouse where agents and brokers could gain virtual nationwide licensing through a single process. The concept was outlined in the Gramm-Leach Bliley Act of 1999, which sought state reforms to licensing. Several attempts to pass the measure in recent years have failed.

With House passage of the bill, “there is unprecedented momentum to get this bipartisan legislation enacted in to law to secure its promise of an efficient and cost-effective insurance licensing process for financial advisors operating in multiple states,” said Cathy Weatherford, president of the Insured Retirement Institute.

Randy Neugebauer

Randy Neugebauer

“This is a common-sense bill that will maintain important consumer protections, retain states’ authority to regulate the marketplace, and ultimately remove a barrier that is impeding broker-dealers’ ability and financial advisors’ willingness to sell lifetime income products,” she added.

IRI and other national insurance industry and agent associations have lobbied for passage of the bill.

“NARAB streamlines the multi-state agent licensing process through a regulator controlled board and preserves state enforcement of critical consumer protections,” said Jim Donelon, president of the National Association of Insurance Commissioners (NAIC), and Louisiana’s chief insurance regulator.  “We urge the Senate to move swiftly to pass this common sense legislation.”

Rep. Randy Neugebauer (R-Texas), lead sponsor of H.R. 1155, noted that the law would allow agents to expand their business to nearby states.

“The NARAB Reform Act will create a more efficient, modern, and workable system of insurance agent licensing,” Neugebauer said when introducing the legislation, “that allows for more competition between insurance agents and brokers, which ultimately means more choices and better prices for consumers purchasing insurance policies.”

Sept. 13, 2013: Updated to include comments from National Association of Insurance Commissioners.

8 Responses

  1. leonard carter Says:

    Great advancement for the broker and agents to keep relationship with the client

  2. Taslima Lazarus Says:

    It’s indeed a great news for producers! Hope the fees would be affordable too.

  3. Steven Kramer Says:

    NARAB passing is fantastic and I remember working on it back in 1981. Congradulations!

  4. John Verbeek Says:

    At first glance this one stop regulatory shop seems in the interest of consumers and independent insurance agents, but if we think this through we ultimately will end up with a FINRA clone for the insurance industry, which means centralization, federalization ins stead of state of control, and higher fees.
    Financial regulation through 50 state commissioners may not seem efficient, but is far more beneficial for competition and for the people. There was a time when banks were regulated that way, when loans did not have to be re-insured/guaranteed by the federal government for making them.
    This legislation, like the affordable care act, will lead to less competition (among a relatively few govt approved carriers), not more.
    Wake up!

  5. Mark Pitrone Says:

    Why does there need to be a national law to allow agents to sell their product in multiple states?

    Article 4, section 1 of the US Constitution says, “Full Faith and Credit shall be given in each State to the public Acts, Records and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.”

    Seems that if an agent is licensed in, say, the State of Ohio, his license should extend to the other 49 States as well.

  6. Susan Rocha Says:

    Now will insurance agents have to learn all the insurance laws for every state? It is hard enough to keep up with them all in just one state. And, it is hard enough to jump through all the hoops the Department of Insurance wants you to do and all their requirements just to keep your insurance license. Of course, that depends on what state you are licensed in.

  7. Ross Schriftman Says:

    Another consolidation of central power. I am licensed in multiple states and have had very little trouble getting non-resident licenses. The State DOIs generally do a good job on this. So, again, why do we need a new bureaucracy to do what they have already been doing?

  8. Brad Burns-Howard Says:

    Have not read the Bill, nor have I been active in the industry for several years since retirement. nonetheless, I am hesitant to state this is a good thing for the small local insurance agent or smaller commercial insureds. Could this lead to a “Walmarting” of the insurance industry, with the large brokerage houses shutting out the local agent?

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