Agents' and brokers' longtime dream of establishing a national clearinghouse for nonresident state licensing could become a reality in two years.

The National Association of Registered Agents & Brokers, established by legislation that also extended the federal government's terrorism insurance backstop through 2020, will be a nonprofit. Its board of directors, consisting of eight current and former state regulators and five other members with expertise in producer licensing, will set membership standards for eligible nonresident insurance producers and provide access to every state on a nonresident basis.

Supporters say streamlining the licensing system would result in lower transactional costs, which could benefit buyers.

The law, supported by the National Association of Insurance Commissioners, preserves states' rights on resident licensing, continuing education and other issues of interest to state regulators.

But there's a lot that has to go well before the national broker licensing clearinghouse is up and running. The first step could be complete in April, when President Barack Obama names the 13 board members, which the law requires be done within 90 days of the law's Jan. 12 effective date.

Still, questions of standards required of producers to participate, as well as how the body will be funded, remain unanswered.

Also unanswered, and likely to remain so for years, is whether NARAB could prove to be a template for future legislation affecting the intersection of state and national insurance regulation.

Supporters are simply happy that the body at last will come into being after several failed attempts to get the Senate to follow the House of Representatives' lead in supporting the legislation.

Joel Wood, senior vice president at the Council of Insurance Agents & Brokers in Washington, noted President Obama has the power to form the board, reconstitute it and overturn any of its decisions.

“All of that is proper and consistent with what a good statute should do,” said Mr. Wood. “I certainly hope this doesn't become a political football, and I don't have any reason to believe it will.”

Mr. Wood singled out Federal Insurance Office Director Mike McRaith for “publicly and privately stating the administration's commitment to an effective (NARAB) board that really wants this to work.”

“Passage of NARAB II was a huge legislative accomplishment,” said Charles Symington, senior vice president of the Alexandria, Virginia-based Independent Insurance Agents & Brokers of America Inc. Details of standards that will apply to producers were deliberately left up to the board, he said.

“As the marketplace evolves, the board and the standards can evolve,” he said. “There's a lot of work that has to go into implementation, and that's where we find ourselves now.” Once the board is appointed, it is supposed to meet within 45 days, he said. “They have to establish bylaws, and then they get into the nitty-gritty of setting these standards.”

One big question facing the body is how it will be funded, said Sue Stead, a partner in the Washington office of Nelson Brown Hamilton & Krekstein L.L.C., which does business as Nelson Brown & Co.

While NARAB can impose membership fees, it cannot get money from the federal government, not even a loan, according to the law.

“How do you get membership fees unless you're up and running?” said Ms. Stead, who also is a former Ohio insurance regulator.

The board will have to consider private funding sources, perhaps loans, said Jill Hoffman, assistant vice president with the National Association of Insurance and Financial Advisors in Falls Church, Virginia. The body will also have to hire staff, she said. “This is not going to be overnight,” she said.

Opinions differ on whether the NARAB model could apply to other insurance regulations.

“I don't see this structure as a template for anything else,” Ms. Stead said. “This goes to licensing.”

“It's too early to tell if it's a template,” Mr. Symington said. “I think it's a concept that can garner the adequate political support for potentially other areas, but first and foremost, it has to be proven to work in the marketplace.”