Will the third time be the charm?
Insurance groups and lobbyists in Washington are hoping so, after the House of Representatives this week overwhelmingly passed a bill (H.R. 1155 ) to streamline the insurance producer licensing process. This is the third time the House has done so.
However in past years the Senate, preoccupied with other matters including the recession and Dodd-Frank reforms, never followed the lead of the House.
This year is looking different. A bipartisan version — the National Association of Registered Agents and Brokers Reform Act of 2013 or NARAB II (S. 534) — has been introduced in the Senate. There are two lead sponsors— Sen. Jon Tester (D-MT) and Mike Johanns (R-NE) — and 24 co-sponsors.
The Senate and House bills are essentially the same, according to industry lobbyists.
In June, the Senate bill moved closer to a vote on the Senate floor after the Senate Banking Committee approved it.
Now the bill’s fate is up to Senate leadership and the calendar.
“The major impediment to Senate consideration is simply finding floor time for its consideration. However, given the support in the Senate, and the overwhelming 397 – 6 vote in the House, we are hopeful we can cross the finish line sometime soon,” John Prible, vice president of federal government affairs for the Independent Insurance Agents & Brokers of America (IIABA), told Insurance Journal.
While the measure’s fate is uncertain, Prible said IIABA is encouraged by indications from Republican and Democratic leadership offices that something might happen soon.
The legislation would create a nonprofit board – on which state regulators would have a majority – for insurance agents and brokers to obtain approval to operate on a multistate basis. This board would establish standards for membership that supporters say exceed the existing requirements in any state.
An agent or broker seeking approval would be required to be fully licensed in his or her home state and satisfy membership criteria, but once approved the agent or broker could obtain the regulatory approval necessary to operate in any other selected jurisdiction.
IIABA is one of a number of insurance groups that have been pushing for NARAB for years.
“NARAB II is vitally important for tens of thousands of Big ‘I’ members who operate on a multistate basis,” says Robert A. Rusbuldt, IIABA president and CEO.
It’s also vitally important for wholesale insurance brokers operating across state lines, according to Brady Kelley, executive director of the National Association of Professional Surplus Lines Offices (NAPSLO).
“Our association and its members have put significant effort into advancing this legislation, taking advantage of every opportunity to highlight its impact and importance to the industry,” said Kelley in a statement. “There is still a lot of work to be done, but NAPSLO is committed to continuing to play a key role in the success of this legislation.”
Kelley said he is also seeing positive signs and is optimistic the Senate will act on it this year.
“I think this year is different,” he told Insurance Journal. “There is a lot more support and there’s been a lot more work.”
Nat Wienecke, senior vice president federal government relations for the Property Casualty Insurers Association of America (PCI), shares the optimism.
“NARAB II has broad support in the Senate and we are confident that the Senate will work through any procedural issues that are outstanding and will take up this measure later this year,” said Wienecke.
Supporters say NARAB would achieve reciprocity in producer licensing and help policyholders by permitting greater competition among agents and brokers and giving consumers greater choices.
“By streamlining the licensing process for agents and brokers across state lines, this legislation will increase competition to the benefit of those in the marketplace for coverage, while still maintaining the state’s authority to regulate the marketplace and protect consumers,” said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC).
“Given the strong, bipartisan support for the NARAB II legislation, NAMIC urges the Senate to follow-up on its passage out of the Banking Committee and bring it to the floor for a vote,” Grande said.
Following the House vote on Tuesday, Ken A. Crerar, president/CEO, The Council of Insurance Agents & Brokers, noted that support for the reform is widespread.
“It is supported by every stakeholder group, including the National Association of Insurance Commissioners, and is on a path to final passage. We hope the U.S. Senate builds on today’s momentum and sends the bill to the President of the United States for his signature,” Crerar said.
The National Association of Professional Insurance Agents (PIA) also supports the bill, after some early reservations about it encroaching on state regulation of insurance. The group responded to the House vote by cautioning against using NARAB to expand federal regulation.
“PIA believes that supervisory authority over NARAB II should never be granted to the Federal Insurance Office (FIO), as that would constitute both a breach of the statutory prohibition against the FIO acting as a regulator of insurance and an assault on the principle of state-based regulation of insurance,” the organization said in a statement.