The Senate voted 67-32 to pass the National Association of Registered Agents and Brokers Reform Act, also known as NARAB II. The legislation was contained within S. 1926, a bill related to the National Flood Insurance Program. The House passed standalone NARAB II legislation in September, but will need to pass the Senate bill for it to become law.
“For the first time ever, the Senate has voted to pass NARAB II legislation to help streamline and improve the insurance licensing process for thousands of financial advisors across the nation," said Cathy Weatherford, president and chief executive officer of the Insured Retirement Institute. "This significant action is an important step toward removing a regulatory barrier that has been impeding broker-dealers’ ability and financial advisors’ willingness to sell lifetime income products. On behalf of our membership, we thank Senator Jon Tester (D-Mont.) and Senator Mike Johanns (R-Neb.) for their leadership on this important issue, and we extend our appreciation to all the Senators who supported this commonsense legislation. With their continued support, more efficient and effective regulation is on the horizon. There is unprecedented momentum to enact this legislation, and we urge all Members of the House to pass S. 1926 to fulfill NARAB II’s promise of streamlined and cost-effective insurance licensing across state lines.”
NARAB II will establish a national licensing organization to allow agents to operate in multiple states more efficiently. An agent will still have to be licensed in his or her home state, and membership in NARAB will streamline the licensure process for every other state in which they choose to do business. NARAB maintains strict licensing and continuing education requirements, and preserves all regulation of insurance at the state level. It also provides an additional layer of consumer protection by requiring the agents who become members to undergo criminal background checks.
Insurance agents and companies will continue to be regulated in all non-licensing matters by the state insurance agencies in the states where they do business.
“Senate passage of NARAB II is a win for insurance agents and brokers, but more importantly it’s a win for consumers,” said John Nichols, president of the National Association of Insurance and Financial Advisors. “Relationships forged between agents and their clients are important and often last for decades. These relationships are built on trust, consumer confidence, and superior service. They shouldn’t have to end simply because a client moves to a different state. Under the bill, if your agent is a NARAB member and you move to another state, then you can keep your agent.”
The House passed standalone NARAB II legislation in September, but will need to pass the Senate bill for it to become law.