Insurance Agents Not Giving Up on NARAB Producer Licensing Reform

The insurance industry has not given up on getting Congress to pass legislation to create a national producer registry and make it easier for agents and brokers become licensed in multiple states.

The Independent Insurance Agents and Brokers of America (the Big “I”) and other supporters nearly succeeded earlier this year by having the licensing legislation — a bill creating the National Association of Registered Agents and Brokers (NARAB) — attached to a flood insurance bill.

That strategy didn’t quite work out.

NARAB passed as a standalone bill in the House overwhelmingly, 397-6. It was the third time the House has approved it.

In the Senate, supporters could not get a standalone vote on NARAB so they maneuvered to have it attached to a popular flood insurance bill. That worked to a point but when all was said and done, the final flood bill that passed in March was not the Senate version but the House version, which did not contain the licensing measure.

The industry been pushing the NARAB bill or a version of it since 2006 and it’s not giving up now, according to Charles Symington, senior vice president of government and external affairs for the Big “I.”

Supporters are going to revisit the strategy of tying NARAB to another insurance measure. This time, supporters hope to attach the NARAB bill to House and Senate bills reauthorizing the federal Terrorism Risk Insurance Act (TRIA), which has widespread support in both houses.

“We’re trying to get what’s called a twofer here. We’re trying to kill two birds with one stone and now attach NARAB II to TRIA, much like we tried to do with flood,” says Symington.

He said he idea has been “well-received” thus far. And his members are “cautiously optimistic” that they can get NARAB II included as part of TRIA.

Supporters of NARAB have had to navigate opposition by Sen. Tom Coburn, R. Okla. Coburn has pushed an amendment that would permit states to opt out of the NARAB requirements, which the supporters say is really an attempt to undermine the whole purpose of the legislation.

“The good news is there isn’t much opposition to NARAB II. There’s one senator who had placed a hold on the legislation. I don’t think he’s a big fan of TRIA anyway, so it doesn’t really change the dynamic all that much. Because TRIA is largely seen as must‑pass legislation, we believe that the Senate leadership will devote the proper floor time to bringing up TRIA, and then hopefully NARAB II along with TRIA,” says Symington.

NARAB is also supported by insurer trade groups as well as the National Association of Professional Surplus Lines Offices (NAPSLO), the Council of Insurance Agents and Brokers (CIAB), the National Association of Professional Insurance Agents and other business groups.

The NARAB legislation would create a nonprofit board – on which state regulators would have a majority – for insurance agents and brokers to obtain approval to operate on a multi-state basis. This board would establish standards for membership. An agent or broker seeking approval would be required to be fully licensed in his or her home state and satisfy membership criteria, but once approved the agent or broker could obtain the regulatory approval necessary to operate in any other selected jurisdiction.

NARAB and TRIA were among the main topics of conversation for about 1,000 agents who met with their elected representatives on Capitol Hill during last week’s Big “I legislative day.
The other issue was tax reform.

Rep. David Camp, who chairs the House Ways and Means Committee, recently released a tax reform blueprint that has agents concerned because it would increase the tax burden on Subchapter S-corps, which is how the majority of independent agencies are organized.

“He [Camp] undertook a very ambitious endeavor, to reform the tax code from top to bottom for the first time since 1986. While we commend him for that, because it’s certainly necessary and we do support overall reform of the tax code, we do have some concerns with his proposal, and a number of other small business groups have also expressed those same reservations,” said Symington.

S-corps pay taxes at individual tax rates. Camp’s proposal would add a surtax to that rate, bringing it to an effective 35 percent rate, according to Symington. The Big “I” lobbyist said this would create an “unlevel playing field” between small businesses and large C-corporations, which pay an effective 25 percent tax.

“Now this is just a draft. It hasn’t even been introduced as a bill,” said Symington. “We don’t think it’s really going to go anywhere right now, but it’s a big deal when you try to overhaul the tax system.”