By Susan Rupe
The U.S. House of Representatives passed the National Association of Registered Agents and Brokers Reform Act of 2013 (NARAB II) on Tuesday. The measure had been backed by a number of financial services organizations, including the National Association of Insurance and Financial Advisors (NAIFA) and the Insured Retirement Institute (IRI). The bill moves to the Senate for consideration.
NARAB II would make it easier for agents and brokers to conduct business in multiple states while preserving state regulation of insurance and agent requirements. The bill would create a one-stop, national insurance licensing clearinghouse for financial professionals operating in multiple states. NARAB would conduct mandatory criminal background checks for state-licensed insurance producers.
In addition, NARAB would investigate consumer complaints and refer any complaints to the appropriate state insurance regulator. NARAB also would maintain a database of insurance producer activity.
NARAB would be governed by a board of directors dominated by state regulators. A prospective NARAB member would be required to be fully licensed in his or her home state and satisfy rigorous membership criteria for the national organization. An approved NARAB member could utilize the clearinghouse to obtain approval to operate in any other state.
NARAB II would preserve the current state-based system of insurance regulation and consumer protection. In addition, it would streamline the requirements of agents who wish to be licensed in multiple states.
Participation in NARAB would be voluntary, and NARAB would not take the place of the current state-based system of insurance regulation. NARAB would not be part of any federal agency and would have no regulatory authority.
“Nearly 80 percent of NAIFA members have lost clients who moved to states in which they were not licensed, and 12 percent report that they have lost more than 50 clients this way,” NAIFA president Rob Smith said. “NARAB II would offer a common-sense solution to this problem.”
“This is a common-sense bill that will maintain important consumer protections, retain states’ authority to regulate the marketplace, and ultimately remove a barrier that is impeding broker-dealers’ ability and financial advisors’ willingness to sell lifetime income products,” said Cathy Weatherford, IRI president and chief executive officer.
Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Susan may be reached at [email protected].
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