Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

COMMENTARY: It's time for Congress to act on broker licensing measure

Reprints

Here's a suggestion for a Congress that's often dismissed as little more than a do-nothing, ideologically driven debate society: Pass the National Association of Registered Agents and Brokers Reform Act of 2013 as soon as possible.

This ought to be a no-brainer. NARAB II, as it's more commonly known, would set up a clearinghouse for interstate producer licensing. This is not exactly a new idea; the Gramm-Leach-Bliley Act called for the creation of NARAB in the last century. The catch was, GLB said NARAB wouldn't automatically come into existence if the National Association of Insurance Commissioners found that at least 29 states enacted reciprocal or uniform licensing laws. In 2002, the NAIC certified that 35 states had done so.

But the effort to ease the costly burden of multiple state licensing didn't exactly work out as planned. Efforts to create NARAB despite the NAIC's certification that a sufficient number of states had met the GLB standards gained steam. These efforts were backed not only by producers but by the NAIC itself, which recently testified in favor of NARAB II.

So what's the holdup? The truth is, there shouldn't be any. The NARAB II legislation has been introduced in both houses of Congress. Its chief sponsors happen to be the chairs and ranking members of the Senate and House of Representatives subcommittees who deal with insurance matters. This is an example of bipartisanship at its best.

And that's the way it should be. The current system of interstate licensing is cumbersome and expensive. Costs of meeting the system's demands get passed on to consumers. Anything that cuts transaction costs without sacrificing quality services deserves applause.

No one's going to argue that NARAB II is perfect; few pieces of legislation are. For example, the membership of its board is heavily stacked toward state regulators. A better balance between the regulators and the regulated might be desirable, but NARAB II is the best vehicle for streamlining licensing that's available right now.

It's likely to stay that way for a while, too. Optional federal charters and licenses for insurers and producers — attractive as they may be — aren't likely to be taken up by Congress any time soon. The financial crisis that began in 2007 and nearly brought down American International Group Inc. and other well-known financial institutions has made further financial deregulation highly unlikely in the foreseeable future.

There's been little if any significant opposition to NARAB II so far, but that doesn't mean it might not emerge. That's all the more reason for Congress to move quickly on this matter.

NARAB II might not be the sexiest piece of legislation to be introduced in this Congress, but it should be one of the easiest to pass. Passing it would give lawmakers a bipartisan achievement to point to. More importantly, it would prove that they can do the right thing when an opportunity like NARAB II presents itself.