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A Second Effort to Establish a National Association of Registered Agents and Brokers (NARAB II)

11 November 2014
Mayer Brown Newsletter

A provision in the federal Gramm-Leach-Bliley Act of 1999 (“GLBA”) provided for the creation of a National Association of Registered Agents and Brokers (NARAB), a nonprofit organization, to administer the licensing of insurance agents and brokers (referred to generically as “insurance producers”) on a nationwide basis.  However, the GLBA provision allowed the states to prevent the creation of NARAB if a majority of insurance regulatory jurisdictions in the United States enacted legislation providing for uniformity or reciprocity of multi-state producer licensing.  That prompted the NAIC to develop a Producer Licensing Model Act (“PLMA”) to streamline the non-resident licensing process for insurance producers, and a sufficient number of states adopted new licensing statutes based on the PLMA to prevent the creation of NARAB.  Even so, despite the adoption of PLMA by most states, the desired uniformity in the producer licensing process remains unfulfilled, as several large states continue to impose different requirements. 

The continuing call for uniformity in insurance producer licensing has been gaining momentum in recent years, and the House of Representatives passed the National Association of Registered Agents and Brokers Reform Act of 2013 (often called NARAB II) as a stand-alone bill (H.R. 1155) in September 2013 to move forward with the creation of NARAB, empowering it to implement licensing, continuing education and other nonresident insurance producer qualification requirements on a multi-state basis. In June 2014, the House Financial Services Committee attached the same NARAB II measure to a Terrorism Risk Insurance Act (“TRIA”) reauthorization bill—the TRIA Reform Act of 2014 (H.R. 4871), which has not yet passed the full House. In July, the Senate also attached NARAB II (in virtually identical form) to its version of the TRIA reauthorization bill (S. 2244), which has passed the full Senate.

NARAB II, which has the support of the NAIC, the FIO, and most of the insurance industry, would “provide a mechanism through which licensing, continuing education, and other nonresident insurance producer qualification requirements and conditions may be adopted and applied on a multi-state basis” for members of NARAB, but would preserve states’ rights with respect to the following:

  • Licensing, continuing education and other qualification requirements of insurance producers that are not members of NARAB;
  • Resident or nonresident insurance producer appointment requirements;
  • Supervision and discipline of resident and nonresident insurance producers;
  • Establishing licensing fees for resident and nonresident insurance producers so that there is no loss of insurance producers licensing revenue to the state; and
  • Prescribing and enforcing laws and regulations regulating the conduct of resident and nonresident insurance producers.

Any insurance producer licensed in its home state would be eligible to become a NARAB member, provided that the producer’s state license has not been suspended or revoked and the producer undergoes a criminal background check.

Although the industry would prefer NARAB II to be enacted as a stand-alone measure, NARAB II may have a better chance of becoming law as part of the TRIA reauthorization legislation— similar to the way in which the Nonadmitted and Reinsurance Reform Act, which had previously passed the House of Representatives multiple times, was ultimately enacted into law as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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