An estimated 60 percent of the Independent Insurance Agents & Brokers of America (IIABA)’s membership employs a full-time staffer to keep track of agent’s licenses in multiple states. If the IIABA has its way, a bipartisan insurance agent licensing reform bill will relieve small agencies of that burden.
“It would create one-stop non-residence licensing for insurance agents and brokers,” IIABA Federal Government Affairs VP John Prible told Insurance Networking News. “Once licensed in their home state, an agent who applied for membership in NARAB would then be allowed to operate in any additional state just by paying the licensing fee.”
If passed, the National Association of Registered Agents and Brokers Reform Act will enable insurance brokers to more easily register across state lines. Under the current system, an agent with clients in multiple states requires a license in each of those states that clients have property.
“The average multi-state agent has 8 or more licenses. Applying for licenses in multiple states is a burden on small agencies. We are looking for regulatory relief from that burden,” said Prible.
The NARAB would be a non-profit independent board comprised of state insurance commissioners and insurance market representatives. Insurance agents who have passed background checks in their home state could apply for NARAB membership, which would enable them to sell insurance in other states. The bill includes provisions to ensure transparency and consumer protection while also empowering NARAB to levy disciplinary measures on agents who do not adhere to guidelines.
“Our goal is to increase competition among the distribution force. It’s our view that increased competition is a good thing and can lead to lower premiums,” said Prible. ”Regulatory burdens insulate the market and keep the market protected from outside competition. With more competition you have to increase your level of customer serve, which creates better service across state lines.”
First conceived in Gramm-Leach-Bliley legislation 13 years ago but never instituted, the bipartisan bill was introduced in the U.S. Senate yesterday by Senators. Jon Tester (D-Mont.) and Mike Johanns (R-Neb).
“As part of Gramm-Leach-Bliley, the original idea of NARAB was to incentivize states to adopt uniform licensing standards. We waited years for that to happen. Our patience ran out,” says Prible. “We realized states would never adopt uniform reciprocal licensing standards. One of the reasons states are supportive of this new bill is because we are leaving them in charge of licensing producers.”
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