States Surpass GBLA Licensing Requirement

A major step in streamlining agent licensing across the states was taken in August when the National Association of Insurance Commissioners (NAIC) made the preliminary determination that at least 35 states had met the reciprocity requirements for nonresident producer licensing under the Gramm-Leach-Bliley Act (GLBA).At press time, the Kansas City, Mo.-based NAIC was expected to officially certify those states at its meeting in September in New Orleans.

According to GLBA, which was passed in November 1999, 29 states had to enact uniform or reciprocal producer licensing laws by November 12, 2002. If they did not, the National Association of Registered Agents and Brokers (NARAB) would be created, under NAIC oversight, to establish uniform state licensing, appointment and continuing education requirements for insurance agents.

Unless challenged, the NAIC's certification of more than 29 states for reciprocity satisfies GLBA's requirement, thereby fending off the formation of NARAB.

Since the passage of GLBA, 46 states have passed legislation or adopted regulations intended to satisfy the law's reciprocity requirements. Legislation is pending in four additional states. Therefore, more states may be recommended for certification.

The 35 states that have met the requirement are Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin and Wyoming.

More to be done

In its efforts to create uniform agent licensing laws across the states, the NAIC adopted the Producer Licensing Model Act in 2000 for state legislatures to consider. The model provides specific provisions that, if adopted, should enable states to comply with GLBA. To meet the requirements for reciprocity under GLBA, states need to enact laws that fulfill GLBA's four-step test, as follows:

* Permit a producer licensed in their home state to sell in nonresident states after satisfying only minimum requirements, such as submission of licensing application and payment of all applicable fees.

* Accept the satisfaction of the continuing education requirements of the producer's home state.

* Not limit or condition a producer's activities because of residence or place of operations (but countersignature requirements are still permitted).

* Grant reciprocity to all other states meeting these reciprocity requirements.

Many in the industry view the states' efforts to meet the reciprocity requirement of GLBA as a major step in modernizing the state-based insurance regulatory system.

The Independent Agents & Brokers of America (IIABA), for example, praises the NAIC's and the states' progress, but is calling for reciprocity in all 51 jurisdictions, and ultimately, for uniform agent licensing standards.

"A national licensing system will not work as intended until all 50 states and the District of Columbia have laws or statutes on the books that meet or exceed the NARAB reciprocity requirements," says Wesley Bissett, vice president of state government affairs at the Alexandria, Va.-based IIABA.

To that end, he says, IIABA will continue to push licensing reform in the states that have not acted and to help states modify previously enacted laws to gain NAIC certification.

The IIABA also is drafting a legislative proposal-which it plans to present to Congress in the coming year-that would mandate reciprocity for producer licensing across the states, while also establishing minimum standards in key areas, including producer licensing.

"If states are able to achieve a greater degree of uniformity, those states that are sitting on the sidelines on reciprocity may get into the game," says Sam Sorich, vice president at the National Association of Independent Insurers, Des Plaines, Ill.