After being the scene of its death at the end of the previous Congress, the Senate overwhelmingly approved a bill Thursday that would help insurance agents practice in multiple states.
The measure, whose primary purpose is to renew a federal terrorism insurance program, had passed the House, 416-5, Wednesday and is now headed to President Barack Obama's desk. He is expected to sign it into law.
The bill contains a provision establishing the National Association of Registered Agents and Brokers, a clearinghouse for insurance professionals who want to register in one or more states outside their own.
Proponents assert that the mechanism will make the insurance market more efficient by allowing agents to follow their clients, if they move to different states, without having to register separately in each state.
“By reducing costs and increasing competition among insurance producers, we will generate lower costs and better service for consumers,” Sen. Michael Crapo, R-Idaho, said during floor debate.
The Senate passed the bill, 93-4, after it
died in the chamber last month at the end of the lame-duck session of Congress when Sen. Tom Coburn, R-Okla., prevented it from coming to the floor for a vote. Mr. Coburn, who is now retired, opposed the bill because it didn't let states opt out of the registry mechanism.
At the beginning of the new Congress this week, the measure regained momentum because lawmakers are concerned about the lapse of terrorism insurance. The insurance registry piece of the bill hitched a ride and will finally get to the Oval Office after a long legislative journey.
“The idea for NARAB is 14 years old, and I'm very glad to see we're now going to get it across the finish line,” Mr. Crapo said.
Groups such as the National Association of Insurance and Financial Advisors and the Insured Retirement Institute can finally declare victory on what they call
one of the biggest industry reforms in more than a decade.
“For NAIFA members, NARAB will mean much-needed reciprocity in producer licensing,” NAIFA Ppesident Juli McNeely said in a statement. “It will reduce red tape and improve efficiencies for our members who are licensed in multiple states. The legislation will benefit consumers as well by allowing them to maintain their preferred insurance agent or broker should they move to a different state.”
Cathy Weatherford, IRI president and chief executive, said in a statement that the Senate action was a "historic vote" that caps “years of efforts seeking more efficient insurance licensing for financial professionals working in multiple states ... One-stop insurance licensing across state lines will soon be a reality.”
Insurance agents can join NARAB if they have not had any disciplinary history and have passed a federal background check. They can then apply for reciprocal producer licenses in other states. They would have to pay each state's fee as well as the NARAB fee, which has not yet been determined.
Individual states, not the national board, would continue to regulate insurance sales.
“Importantly, this legislation deals specifically with marketplace entry and would not impact the states' day-to-day authority over insurance marketplaces,” Mr. Crapo said.
