Time for Congress to Pass NARAB II

Recently, the U.S. Senate Committee on Banking, Housing and Urban Affairs passed by voice vote the “National Association of Registered Agents and Brokers Reform Act of 2013” (NARAB II). This was the first piece of legislation the committee considered in the 113th Congress, and the broad, bipartisan support for the bill signals an important milestone in state licensing reform.

Licensing issues continue to increase as agents and brokers face duplicative state licensing requirements and unnecessary costs. Recently, the Banking Committee Subcommittee on Securities, Insurance and Investments held a hearing on NARAB II. In the hearing, witnesses referenced the burden that licensing compliance places on smaller businesses that do not have the resources to keep up with the requests for documents and duplicative requirements under the current system.

Jon Jensen, representing the Big “I,” said, “My firm spends tens of thousands of dollars per year on licensing fees alone, but the more significant cost for us is the immeasurable staff time that goes into maintaining hundreds of licenses and responding to the duplicative state requirements and document requests.”

Research conducted by the Big “I” shows that nearly 60% of member businesses have a staffer dedicated to obtaining and maintaining the correct insurance licenses for the agency and its personnel, and about 3% of insurance agency operating expenses are spent on licensing compliance efforts—this percentage is highest for the smallest agencies at 4.3%.

Jensen added, “For smaller businesses, which lack the staff and resources of larger competitors, the exorbitant cost and unnecessary complexity of ongoing licensing compliance is especially burdensome.”

The creation of NARAB II will allow agents and brokers to focus on their responsibilities to their clients and spend less time dealing with red tape. Reducing costs and increasing competition among insurance producers will generate lower costs and better service for consumers.

Importantly, NARAB II deals specifically with marketplace entry and would not impact states’ day-to-day authority over the insurance marketplace. Insurance commissioners will be able to better catch bad actors, who after losing a license in one state, can today move quickly to enter another. Additionally, state regulators will serve on the board of NARAB with the same objectives they have as insurance commissioners: to protect the public interest by promoting the fair and equitable treatment of insurance consumers.

Sens. Jon Tester (D-Mont.) and Mike Johanns (R-Neb.) worked on a bipartisan basis to build broad support for NARAB II in the Senate, and I am proud to be an original co-sponsor of this legislation. Working with Chairman Tim Johnson (D-S.D.), we were able to pass this legislation by voice vote in the Banking Committee.

The Big “I” has been instrumental in garnering support for the bill, working within the industry and with parties across both aisles, in both chambers, to secure the necessary support needed to ensure passage. NARAB II also has wide support in the U.S. House of Representatives, where it has already passed in two previous Congresses. The rate of growing support is an encouraging indicator that it could finally be enacted this year.

I strongly support this legislation because it simplifies agent licensure in a way that preserves the ability of states to enact and enforce insurance laws while providing customers with additional, affordable options when shopping for insurance. It is time for both the Senate and House to work to push this common-sense bill to finally make it across the finish line.