NARAB II Bill Clears Senate Banking Committee

Companion legislation, H.R. 1155, has been introduced in the House by Rep. Randy Neugebauer, R-Texas, and Rep. David Scott, D-Ga.

The bill has passed the House in two prior Congresses, and has strong support in that body — strongly increasing the likelihood the bill will be enacted this year despite the fact that Congress is deeply divided.

Sen. Elizabeth Warren, D-Mass., was able to win support for an amendment to the bill that will allow President Obama to appoint five other members of the board, with the stipulation that they “shall have demonstrated expertise and experience with property and casualty and life and health insurance producer licensing.”

“I’m pleased the Banking Committee agreed to this amendment to improve the national insurance licensing bill,” Warren said.

The prior version required those five board members to be “representatives” of those industries rather than merely having experience/expertise.

The issue of state regulatory supremacy came up in an amendment proposed by Sen. Tom Coburn, R-Okla., that would allow states to “opt-out” of NARAB II if the state felt its authority was going to be limited through creation of NARAB. However, the amendment was rejected by the panel.ndment that would potentially allow consuemr itnerests or even federal regualtory stakeholders to be a part of the NARAB vboard.

Under the bill, insurance agents will be able to apply for NARAB membership and become licensed to sell insurance in multiple states, but states will maintain their full authority in regulating the business of insurance.

“This will reduce costs and red tape for insurance agents and brokers who operate in multiple states, and will allow consumers to maintain relationships with their insurance agents if they relocate to another state,” said Sen. Tim Johnson, D-S.D., in praising committee action on the legislation.

“Today’s action is an important step forward for this bipartisan legislation, which promotes the efficient and cost-effective licensing of thousands of financial advisors across the nation,” said the Insured Retirement Institute (IRI) in a statement. “We urge all Members of Congress to support NARAB II and continue to advance this legislation.”

The annual report of NARAB will be sent to the U.S. Treasury Department  on its way for review to the president under the bill, although the Federal Insurance Office (FIO), part of Treasury, had wanted to be involved in receiving it, according to sources. The industry reportedly balked a bit at FIO’s direct involvement.

CIAB, which has long supported the creation of a national agent/broker licensing system praised the work from all parties and sides of the aisle, and has seen such legisaltion pass the House twice before but ultimately go nowhere. The fits and starts of the legisaltion were overcome by progress in the Senate this week.

“This has been an inclusive process, and many members of the Senate Banking Committee — from liberal to conservative — helped improve it. Given the number of years it has been under consideration and the rare unanimity of the stakeholders, it also is a delicate compromise,” CIAB’s Crerar stated.