The recently enacted Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) provides for the establishment of a National Association of Registered Agents and Brokers (NARAB), which should help streamline US insurance producer licensing in the United States. Currently, a US insurance agent, broker or other insurance producer must have a license from a home state and then must obtain non-resident licenses in other states in order to be able to sell, solicit or negotiate insurance in such other states. Many states do have similar requirements for non-resident insurance producer licensing, but there remain many differences in the application process and other requirements that can be burdensome for insurance producers. The existing National Insurance Producer Registry (NIPR) does help somewhat rationalize the process for obtaining non-resident licenses across the states, but many significant states (including California, Connecticut, Florida and New York) are not members of NIPR.
In 1999, the Gramm-Leach Bliley Act (GLBA) provided for the creation of a National Association of Registered Agents and Brokers. However, that first NARAB did not come into existence because the required conditions for its creation were not met – specifically, the US National Association of Insurance Commissioners adopted the Producer Licensing Model Act which was enacted by various states, such that GLBA’s requirement for states’ reciprocity for agent and broker licensing was ostensibly satisfied and therefore NARAB no longer had to be established under GLBA. However, the uniformity and reciprocity for insurance producer licensing that was desired under GLBA was never fully realized, which led to renewed calls for NARAB.
“NARAB II” (as NARAB under TRIPRA is often called) will be a non-profit District of Columbia corporation. It will be governed by a board of directors consisting of eight state insurance commissioners and five representatives of the insurance industry.
An insurance producer licensed in a US state will be able to become a member of NARAB and thereafter will be able to become authorized to act as a producer in other US states by paying the required licensing fees for other states but without needing to meet other requirements of those states. NARAB will have membership requirements with respect to qualifications, initial and continuing education, training, criminal background checks and other aspects, which will be based on the highest levels of insurance producer qualification requirements in place in the states. Both individuals and business entities will be able to become NARAB members, although a business entity will need at least one responsible individual who will need to be an individual NARAB member.
NARAB will not be a federal insurance regulator, and the states’ laws concerning insurance producers – such as with respect to market conduct, producer conduct, unfair trade practices and consumer protections – will remain applicable to all non-resident producers that utilize NARAB. However, states will generally not be able to impose additional requirements on non-resident insurance producers who will be NARAB members and will be prohibited from impeding the activities of or applying any laws discriminatorily or arbitrarily against NARAB members.
By allowing an insurance producer licensed in its home state to become a member of NARAB and then obtain non- resident producer authority in any other state in the US simply by paying the applicable state fees, NARAB should greatly help simplify insurance producer licensing in the United States.