Two bills that would transform the way insurance agents are licensed and regulated are likely to face a difficult time in the Senate, according to insurance industry officials.
Two bills that would transform the way insurance agents are licensed and regulated are likely to face a difficult time in the Senate, according to insurance industry officials.
One bill, the Insurance Information Act of 2009, would set up a federal Office of Insurance Information within the Department of the Treasury to provide expertise on insurance policy issues to the administration and to Congress. The other, the National Association of Registered Agents and Brokers Reform Act, would streamline the licensing of agents and brokers across state lines.
The Insurance Information Act of 2009 was introduced by Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. NARAB II was introduced by Reps. David Scott, D-Ga., and Randy Neugebauer, R-Texas.
Earlier versions of both bills were introduced in the House last year, but were not taken up by the Senate.
“We see support for both bills,” said Charles Symington, senior vice president of government affairs for The Independent Insurance Agents and Brokers of America, of Alexandria, Va.
With the Senate focused on a sweeping reform of the way the entire financial services industry is regulated, it remains to be seen whether these two bills will be looked at.
“There's only so much oxygen,” said Mr. Symington. “When they're trying to stabilize the financial markets, it does leave less time than people would like.”
OPTIONAL FEDERAL CHARTER
While agent groups support NARAB II, the American Council of Life Insurers in Washington has reservations.
“The best approach to reform of producer licensing is through an optional federal charter,” ACLI president and chief executive Frank Keating said in a statement. “OFC is the only insurance regulatory reform concept that addresses the dynamic and global nature of the insurance marketplace.”
Under an OFC, which has been controversial among insurers and state regulators, insurers would have the option of being regulated by a federal body instead of continuing to be regulated by states.
The Independent Insurance Agents group opposes an optional federal charter.
“You have not seen one property-casualty insurer go insolvent during this current crisis,” said Mr. Symington. “That is a tell-tale sign the states are doing a good job in their core mission. There's no reason to create a whole new regulatory structure out of whole cloth.”
State insurance legislators have concerns about both bills, said Susan Nolan, executive director of the Troy, N.Y.-based National Conference of Insurance Legislators.
All but four states have already set up reciprocal licensing agreements for insurance agents, and NCOIL supports efforts to bring more reciprocity, she said. “We're just wondering how necessary it is given the success of the state licensing efforts,” she said.
RECIPROCAL LICENSING
However, California, New York, Florida and Washington have not yet adopted agent licensing reciprocity, leaving major chunks of the insurance market uncovered by reciprocal licensing.
Under the legislation, non-resident agents could register with a National Association of Registered Agents and Brokers once they have met the requirements of their home state, as well as the requirements of the national entity.
New requirements added to the bill introduced this year include required criminal background checks for all agents that would be registered with NARAB, something currently required by only 17 states.
In addition, this year's bill would require that the president appoint board members to NARAB with approval by the Senate. State insurance regulators would continue to have a 6-5 majority on NARAB's board of directors, as was the case under the bill last year.
Mr. Kanjorski's Insurance Information Act may have an even harder time gaining support.
“We still have a strong opposition to a bill that would establish a framework to empower a federal insurance regulator,” Ms. Nolan said. “At a time when the feds have not had the reputation of doing a great job on some issues why would you develop another federal bureaucracy?”
State officials fear pre-emption by the federal government over what has long been the province of state regulators. In addition, NCOIL objects to the lack of a legislative presence on the proposed OII advisory group.
NCOIL will discuss both pieces of legislation at its summer meeting in Philadelphia July 9-12, said Ms. Nolan.
E-mail Sara Hansard at shansard@investmentnews.com.
