Supporters of a bill that would streamline nonresident insurer producer licensing must surmount several challenges if the measure is to become law in this Congress.

The measure — the National Association of Registered Agents and Brokers Reform Act of 2013 — would establish a nonprofit organization to streamline the licensing process for insurance agents and brokers operating outside their home states.

The idea is not new. The Financial Services Modernization Act of 1999, better known as the Gramm-Leach-Bliley Act, called for establishing NARAB if 29 states passed reciprocal or uniform licensing statutes. The NAIC certified that 35 states had met the requirement by September 2002.

But while most jurisdictions passed some form of licensing reform, their efforts fell short of what supporters sought.

“Reciprocity is never as good as uniformity in our mind, and there is very little uniformity in nonresident producer licensure,” said Joel Wood, senior vice president of government affairs at the Council of Insurance Agents & Brokers in Washington.

Consequently, the House passed two previous versions of the NARAB II Act, but the Senate failed to follow suit.

Producer groups and the National Association of Insurance Commissioners have called for passage of the new bill. Sens. Jon Tester, D-Mont., and Mike Johanns, R-Neb., and Reps. Randy Neugebauer, R-Texas, and David Scott, D-Ga., introduced NARAB II in the House and Senate last month. The four sponsors either are the chair or ranking member of panels that deal with insurance matters in their respective houses.

%%BREAK%%

“In a nutshell, NARAB I would have formed this nonprofit one-stop licensing board if a majority of the states did not meet a level of reciprocity that the NAIC determines,” but enough states did meet the requirement, said John Prible, vice president of federal government affairs for the Alexandria, Va.-based Independent Insurance Agents & Brokers of America.

NARAB II has no such strings attached and no conditions that have to be met. “This affirmatively creates the NARAB board” two years after enactment, Mr. Prible said. NARAB would streamline nonresident market access for insurance agents and brokers while ensuring that producers remain subject to state market conduct authorities.

The proposal enjoys the support of the NAIC, as NAIC Vice President Monica Lindeen, who also is Montana state auditor and commissioner of securities and insurance, told the Senate Banking, Housing and Urban Affairs Committee's Subcommittee on Securities, Insurance and Investment.

“The NARAB Reform Act provides for nonresident insurance agent and broker licensing while preserving the rights of states to supervise and discipline agents and brokers,” Ms. Lindeen said in written testimony presented last month to the panel, which Sen. Tester chairs.

“We've gone 14 years, and I think there has been in that time there's been a tremendous amount of coalescence on the need for administrative simplicity,” said Mr. Wood. “To its credit, the NAIC has worked very closely with us to help tailor a NARAB proposal that wouldn't be a regulatory body but rather an administrative clearinghouse.”

But Mr. Wood noted that the bill must still clear “all kinds of hurdles.” The first is that “in an increasing dysfunctional Congress, getting anything to the finish line is always more difficult than it is stopping something,” he said.

He also said that “nothing worth doing doesn't attract some degree of opposition.” While the NAIC has done an “outstanding job” in bringing the states together in supporting NARAB II, “you never know when one's going to come out of the woodwork opposing the proposal.”

%%BREAK%%

NARAB II could draw fire from the right and left, with the left arguing the measure would create an unaccountable body and the right arguing that the bill was an exercise in NAIC turf building, he said.

A third hurdle is educational, which is “convincing members of the U.S. Senate that the hurdles of multistate nonresident producer licensure constitute a bureaucratic nightmare that needs to be solved,” Mr. Wood said.

“The first and most significant obstacle is the calendar,” said Mr. Prible. “We feel really solid in the House,” he said, there are fewer markups in the Senate. The fact that the Banking Committee does not schedule markups often lessens the opportunity to get something out of committee, Mr. Prible said.

“This has to be the session,” said Mr. Wood. “Our organization formed its first task force on these issues in 1933; we need to have a resolution on these issues.”