Legislation allowing creation of the National Association of Registered Agents and Brokers (NARAB) has passed the Senate. The bill was added to S. 2244, the Terrorism Risk Insurance Program Reauthorization Act (TRIA) of 2014, by voice vote.
The bill has strong support from the National Association of Insurance and Financial Advisors (NAIFA) and the Insured Retirement Institute (IRI) on the life side, and the Independent Insurance Agents and Brokers of America (IIABA) and the Council of Insurance Agents and Brokers (CIAB) on the property and casualty side.
John Nichols, NAIFA president, said NAIFA is “pleased” that the Senate has advanced the bill containing the NARAB provision. “While leaders in the House continue discussion over the Terrorism Risk Insurance Act (TRIA), it is our hope they will be able to pass something in the near future so the House and Senate can finalize both TRIA and NARAB this year.”
Nichols said that, “it is clear that” NARAB has had overwhelming bipartisan support from both the House and Senate. “The time is right for lawmakers to get this over the finish line. NARAB is a win for insurance agents and brokers, but more importantly, it’s a win for consumers,” he said.
Cathy Weatherford, IRI President and CEO, said “it is clear there is tremendous support in Congress for passing NARAB II this year.” She said the legislation is “commonsense,” and promises to streamline the insurance licensing process for financial professionals operating in multiple states and will help ensure that clients have access to a full suite of retirement income strategies without forcing their advisors to overcome the burden of redundant insurance licensing requirements.”
“IRI will remain committed to working with policymakers to remove any and all barriers that may impede the availability and usage of lifetime income strategies, and we will continue to work with congressional leaders to advance NARAB II this year,” Weatherford added.
Companion House legislation, H.R. 4871, the TRIA Reform Act of 2014, containing similar language except for a sunset provision added to the Senate bill last week, has been reported out by the House Financial Services Committee.
However, the bill is being held up in the House because the provisions dealing with a federal backstop for terrorism risk insurance are controversial and it is unclear when the House will reach a consensus on its version of the legislation.
Given that it is unclear when the House will pass its version of the legislation, and when differing versions can be reconciled, industry lobbyists are cautioning that the bill containing the TRIA and NARAB provisions is unlikely to be enacted by Congress until the fall at the earliest, and perhaps as late as December.
“The idea for NARAB is now 14 years old,” Sen. Mike Crapo, R-Idaho, ranking minority member of the Senate Banking Committee, said on the Senate floor. ”We've been working on it literally for that long, and I'm hoping that in this legislation today we can get it across the finish line," he said.
In his comments, Crapo said that under the NARAB provisions, insurance commissioners of the states “will be able to better catch bad actors who, after losing a license in one state, will try to enter quickly into another state.”
Crapo also said that state regulators will serve on the board of NARAB “with the same objectives they have as an insurance commissioner -- to protect the public interest by promoting the fair and equitable treatment of insurance consumers.”
He added that the creation of NARAB will allow agents and brokers to focus on their responsibilities to their clients and spend less time dealing with red tape. “By reducing costs and increasing competition among insurance producers, we will generate lower costs and better service for consumers,” he said.
Importantly, Crapo said, NARAB deals specifically with marketplace entry and “would not impact a state’s jurisdiction over day-to-day authority in the insurance marketplace. This is a very critical point, because I think probably the biggest issue relating to this legislation is preserving and protecting state’s rights and state jurisdiction with regard to regulation of the insurance marketplace,” he added.
The Senate bill does contain a provision demanded by Sen. Tom Coburn, R-Okla., that will require another vote to sustain NARAB within two years of the time it is up and running.
On the pc side, Charles Symington, IIABA senior vice president of external and government affairs, said that while the Senate bill contains the “sunset” provision “the IIABA would like to see changed before the measure is enacted into law, it was critically important to move the bill forward in the legislative process.”
Symington said that the NARAB provision “would achieve much needed reciprocity in producer licensing and help policyholders by permitting greater competition among agents and brokers.”
He said the bill “would build upon regulatory experience at the state level, promote greater consistency in agent and agency licensing, and ease the burden that many agents face in doing business across state lines.”
Joel Wood, CIAB senior vice president of government affairs, said the CIAB is “pleased” that the legislation also includes “our long-sought NARAB proposal to create a uniform agent/broker nonresident licensure clearinghouse.”
Wood said the sunset provision is not part of the legislation that has cleared the Financial Services Committee, “and we will strongly push to eliminate the sunset provision. The good news, however, is that if a TRIA compromise between the two chambers is reached this year, it is virtually certain that NARAB will be created,” Wood said.