The White House has expressed concerns about some technical provisions of legislation that would re-establish the National Association of Registered Agents and Brokers (NARAB).
At the same time, Sen. Tom Coburn, R-Okla., has proposed an amendment to the legislation that would allow states to opt out, a provision that concerns industry officials.
Officials of the National Association of Insurance and Financial Advisors voiced concern about the Coburn amendment.
“NAIFA would urge the Senate to reject Sen. Coburn’s expected amendment that would allow states to opt out of the national NARAB program,” said John Nichols NAIFA president.
Nichols added, “NARAB would provide agents with an efficient way to be licensed to serve clients in multiple states while maintaining strict licensing requirements. The bill, as written, preserves state regulation of insurance and enjoys broad support among state insurance regulators and other stakeholders.”
“An opt-out sounds appealing but in reality is a poison pill,” added Joel Wood, senior vice president of government relations at the Council of Insurance Agents and Brokers.
He said that under NARAB, states retain all of their core licensing responsibilities, “it is simply an administrative mechanism for multistate licensing.”
Wood added that, “As we’ve seen with the surplus lines laws post the Dodd-Frank financial services reform law, it’s important for all states to be a part of any such facility or it simply doesn’t work.”
“We hope and think we will move forward toward that goal this week,” Wood added. The bill is S. 1926, the Homeowner Flood Insurance Affordability Act of 2014 and National Association of Registered Agents and Brokers Reform Act of 2014.
The Senate brought the bill to the floor through rarely used emergency procedures by an overwhelming 86-13 vote Monday night. Floor action could begin as early as Wednesday, industry officials said.
A trade group official explained that the legislation is modeled after the National Association of Securities Dealers (NASD) and will be a completely voluntary, self-regulating organization. “The big concession we’ve made is on governance – that a majority of the governance has to come from state insurance commissioners,” the lobbyist said.
That provision is what caught the attention of the White House. In a statement of administration position released Monday night, the administration said that it “has constitutional concerns” with the requirement that the president reserve eight of the 13 positions on the NARAB board of directors for state insurance commissioners, “which appears to significantly constrict the pool of individuals from which the president would be able to make those eight nominations.”
However, the statement of policy did not include a veto threat.
The statement of administration position said this restriction “appears to impermissibly limit” the scope of the president's appointment power. In the statement, the administration said it recommends that this requirement be amended to expand the size of the pool of potential appointees.
The White House statement also voiced concern with another provision, which provides a process for conducting criminal history records checks on individuals applying to become members of NARAB “that is inconsistent with the normal process the FBI uses to conduct thousands of such background checks.”
The statement said that the administration believes the bill “can be made consistent with current law in order to assure the benefits of an efficient and effective established process,” but did not elaborate.