Despite having passed legislation implementing the formation of the National Association of Registered Agents and Brokers (NARAB) in October, the US House of Representatives is taking issue with the incarnation approved by the Senate. Citing lack of support for provisions delaying flood insurance premium hikes, Speaker John Boehner said the House would never pass the legislation in its current form.
However, advocates for NARAB say they aren’t deterred by this obstacle. National Association of Insurance and Financial Advisors (NAIFA) President John Nichols, who has been fighting for a national licensing system for nearly eight years, said he is confident the House and Senate will come up with a compromise.
“As the details of the flood bill get worked out between the two chambers, we are told that NARAB should be included in whatever bill would come out of a House and Senate conference scenario,” Nichols said. “That would pave the way for final enactment of NARAB II into law.”
Nichols added that regardless of concerns regarding minor differences in the House and Senate versions of NARAB, as well as the White House’s concern over provisions for background checks and board membership, he feels efforts are nearly at the finish line.
“We’ve been working on this, literally, for years,” he said. “So to get to this point where the House and the Senate both want it and everyone is in agreement over the major building blocks, I think we can work the details out and move forward.”
Joel Wood, senior vice president of government relations at the Council of Insurance Agents and Brokers (CIAB), also expressed his confidence that industry efforts would finally be realized this year—even if Congress doesn’t resolve its differences with this embodiment of the bill.
“It’s still unclear whether the House and Senate will be able to reconcile a flood bill, but it’s not over ‘til it’s over,” Wood told Insurance Business. “If necessary, we might have to proceed on multiple other legislative fronts to get it out by the end of the year.”
Like Nichols, Wood stressed the “near decade” it has taken for NARAB to reach this point despite the issue being a “no-brainer.”
“If you step back from this, what is it? It’s a driver’s license,” he said. “It lets you drive in other states.”
At stake is a potential decrease in the approximate 29 hours per year and $225 agents spend on licensing costs and requirements. In fact, NAIFA noted that 28% of its members hire staff specifically to manage licensing compliance requirements.
As a full 80% of NAIFA members currently do business in two or more states, the issue is one affecting a large number of insurance agents and brokers. One survey participant even suggested the passage of NARAB might increase agencies’ book of business.
“It’s a pain to be licensed in multiple states and I would be licensed in a lot more if it were not such a hassle and if it were not so cost prohibitive,” the participant said.
While some producers have expressed hesitancy regarding more government regulation of the insurance space, Nichols noted agents and brokers are not required to go through NARAB and the real issue is licensing ease for those who want to continue servicing clients who may move to a different state.
“This argument that it’s encroachment by the federal government in this particular issue, I would think those that are working in multiple states would want the ease to satisfy all state requirements with one form and one fee,” he said. “More importantly, for the consumer, it will allow them to keep working with an advisor they’ve developed a relationship with. It won’t force people who move to get a new agent.”
NAIFA noted that more than 80% of survey respondents have lost a client who moved to a state in which they were not licensed.
