The panel moved by voice vote to advance H.R. 5611, the NARAB Reform Act, creating a private, self-regulatory organization that would administer extraterritorial licensing for nonresident producers nationwide. Introduced late March 13 by Reps. David Scott, D-Ga., and Geoff Davis, R-Ky., the proposed law would charter NARAB as a nonprofit organization to which licensed agents and brokers could apply for membership.
The bill had strong support from major producer trade groups, such as the Independent Insurance Agents & Brokers of America, the National Association of Insurance and Financial Advisors, and the Council of Insurance Agents & Brokers.
"The most serious regulatory challenges facing our members are the redundant, costly and contradictory requirements that arise when they seek licenses on a multi-state basis," Big I President Robert Rusbuldt said in a statement. "The NARAB Reform Act solves these problems through targeted reform and modernization of nonresident agent and broker licensing without affecting resident licensing."
It also earned support from the National Association of Insurance Commissioners after it was amended to ensure state regulators would have a majority on the association's governing board. As amended, NARAB would be overseen by a board composed of six state insurance regulators and five marketplace representatives.
In order to qualify for membership in NARAB, an applicant would have to undergo fingerprinting and a criminal background check and meet association standards for education and training. States would continue to supervise producers and enforce consumer protections, and could still collect any currently applicable producer licensing fees.
The bill now moves either to the full House Financial Services Committee, or directly to the House floor, at the discretion of committee leadership. Companion legislation for the NARAB Act has not yet been filed in the Senate.
GLBA required creation of the association if fewer than 29 states enacted reciprocal agent-licensing laws by November 2002. In September 2002, the National Association of Insurance Commissioners announced 35 states had been certified as complying with the reciprocity rule.