As the trusted adviser, the independent agent and broker serves as a valuable asset to the clients they serve in designing and implementing programs that mitigate risk and manage expense for their clients. Technology has also made it easier for clients to work with advisers who may be in another part of the country. The current environment, however, makes it a challenge for an adviser to serve a client in another state due to individual state licensing requirements. The requirements are uneven and can be expensive from a time and cost standpoint.

The National Association of Registered Agents and Brokers (NARAB) proposes standards that would create an environment where agents and brokers could work across state lines with clients. At its core the proposal, passed by both the House and Senate this week, creates reciprocity in licensing requirements and results in administrative efficiency for the agents and brokers so the agent and broker could work with and for a client that resides in another state.

Also see: “Senate passes broker licensing bill NARAB II

If adopted — it awaits President Obama’s signature, the proposal could affect key stakeholders in the ways listed below.

It is important to note that the state insurance regulators would continue to have jurisdiction over the activities of any agent working with clients in their state, as they do today. They would also continue to receive license fees as they do today for insurance agents licensed in their state.

Broker benefits

For the agent and broker, creating licensing reciprocity across the states creates efficiency in administration and should result in cost reductions as measured by time and actual cost of filing.

Additional benefits for the agent and broker as outlined in the proposal include:

-       NARAB would create a central administrative clearinghouse for agents;

-       The clearinghouse would also assist the agents and brokers working through the clearinghouse by:

  • Centralizing non-resident licensing applications;
  • Centralizing continuing education programs to meet non-resident licensing requirements;
  • Centralizing criminal background checks for licensing requirements.

For clients this is a good proposal as it would reduce a potential barrier for an agent and broker to work with that client if the agent and broker were in another state.
The bottom line: Differing licensing requirements from state to state could deter some advisers. Worst case, some trusted advisers could decide cost and administration requirements chew up too many internal resources, thus forcing them to sever ties with existing clients and only focus on their home state. On the flip side, if this proposal is adopted, it will simplify the process and reduce costs for the broker who wants to work across state lines. 

Braun is an EBA Advisory Board member and the Executive Director of Benefit Advisors Network (BAN) and its sister organization, National Benefits Center (NBC). For more information, or to contact the author, please visit

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