By the end of the week, Congress is likely to approve legislation that would establish the first national registry for insurance salespersons, a step that will make it easier for them to practice in multiple states.
The Senate is considering a terrorism insurance bill that includes language to create the National Association of Registered Agents and Brokers. Known as NARAB, it would be a clearinghouse for insurance professionals who want to register in a state outside their home state.
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.
Backers of the mechanism, who call it the most significant insurance reform in more than a decade, have been
trying for years to gain congressional approval. As the lame-duck session winds down this week, they're closer than ever before.
But first it will have to overcome the objections of Sen. Tom Coburn, R-Okla., who has placed a hold on the terrorism bill.
Mr. Coburn is blocking a vote because he wants to amend the NARAB provision to allow states to opt out.
“If NARAB is as popular as proponents say that it is, no state will ever opt out and the amendment will be moot,” Elaine Joseph, a spokesman for Mr. Coburn, wrote in an email.
Regardless, Lee Covington, senior vice president and general counsel of the Insured Retirement Institute, is optimistic.
“We fully expect that it will pass the Senate before they go home for the holiday,” he said.
One of the biggest changes NARAB ushers in is that it will set continuing education and other standards for insurance agents who want to expand their business to other states. The agents will not have to comply with each state's requirements. Enforcement would still be done on a state-by-state basis.
“This is going to streamline things so that our members' businesses will run more efficiently,” said Jill Hoffman, assistant vice president for federal relations at the National Association of Insurance and Financial Advisors.
The NARAB system also will help insurance agents follow mobile customers. For instance, if a client of an Indiana agent retires and moves to Florida, the agent could apply through NARAB to practice in Florida.
“They're able to not miss a beat and to be licensed in an efficient and effective way,” Mr. Covington said. “That's good for investors. That's also good for broker-dealers and financial advisers.”
It's unclear when the Senate will get to the bill containing NARAB. On Tuesday, it was working through a long list of presidential nominations.
The last item on the lame-duck Senate agenda is a package of tax breaks that was approved earlier by the House. The underlying bill that contains the NARAB provision, a measure that would renew a federal terrorism insurance program set to expire on Dec. 31, is likely to come up for a vote just before the tax bill.
The NARAB provision was carefully crafted to gain the support of state insurance regulators, Ms. Hoffman said.
The 13-member board will consist of eight state insurance commissioners, three members who specialize in property and casualty insurance and two who have expertise in life insurance.
“We believe this bill has achieved the right balance,” Ms. Hoffman said. “It is constitutional. It is positive for our members; it is positive for our clients.”
The White House
has expressed concern about how NARAB's background-check procedure aligns with FBI practices, but has not threatened a veto.
“We think this is something that can be worked through and will be fine at the end of the day,” Ms. Hoffman said.
