President Obama late Monday signed into law a bill to re-establish the National Association of Registered Agents and Brokers (NARAB II), legislation that aims to ease the ability of brokers to sell insurance in states across the U.S.
The legislation was attached to a bill renewing the Terrorism Risk Insurance Act (TRIA) through Dec. 31, 2020.
The Independent Insurance Agents & Brokers of America (the Big I) applauded the Presidents action, saying NARAB II will achieve much needed reciprocity in producer licensing and help policyholders by permitting greater competition among agents and brokers.
TRIA and NARAB II "will benefit thousands of small businesses and insurance consumers across the country, says Bob Rusbuldt, Big I president and CEO. "Long awaited reform on non-resident licensing for agents is finally coming.
Charles Symington, Big I senior vice president of external and government affairs says the implementation of NARAB II may take some time, but will provide relief for agents and brokers as well as increased choice for consumers.
Currently agents get licensed in their primary state of residency and have to wait for reciprocity in non-resident states.
There are no industry standards, says Joe Murad, managing director of exchange solutions at Towers Watson. We welcome any committee that would infuse a set of standards, because were trying to ensure theres no latency.
NARAB II will accelerate reciprocity through data sharing, he adds.
The Council of Insurance Agents and Brokers expects NARAB to work closely with the National Insurance Producer Registry "the online licensing service that provides an electronic mechanism for agents and brokers to obtain state resident and non-resident licenses."
Likewise, the National Association of Insurance Commissioners and state regulators "will have strong and important voices in its operation," CIAB adds.
"Given the complexities of establishing the system, it is likely to take some time to get up and running," CIAB agrees.
Tim Owen, vice president of product management for Vertafore, which provides cloud-based insurance software and services, including licensing and registration services, has been in conversation with NIPR and industry associations about next steps.
There are going to be a lot of details operationally and technically to work out here, he says.
There are going to be some oversight issues and the regulators are going to have to figure out how to work with another entity, as well, he says.
For example, he says, if the association is going to serve as a national clearinghouse and a national repository theyre going to have to be able to keep track of complaints against members and follow-up with those complaints and mediate them.
Operationally, he says, the first step for NARAB is to put a Board of Directors in place. The law allows 90 days to do so. Once the Board of Directors is in place theyll have to create a mission and vision.
Theyll also have to figure out how to get the technology in place to make this happen, he adds.
If they leverage technology that already exists, such as the NIPR, or Vertafores, or a combination of systems in the industry today and the expertise that comes along with that, Owen says the association could be up and running by the middle of next year.
If they choose to build a system from scratch, it will probably take twice as long, he adds.
NARAB II will streamline the non-resident producer licensing process but preserve the states ability to protect consumers it does not create a federal regulator for insurance and the states will retain their regulatory authority over consumer protection, market conduct and unfair trade practices, according to a brief on the bill by the National Association of Insurance Commissioners. The states also will also retain their rights over resident licensing, as well as supervision, discipline and the establishment of licensing fees for insurance producers, NAIC adds.
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