Senate Passes TRIA Reauthorization and NARAB II

On July 17, 2014 the Senate passed legislation reauthorizing the Terrorism Risk Insurance Act (TRIA) for seven years. Included in the TRIA reauthorization was an amendment offered by Senator Jeff Flake (R-AZ) requiring the U.S. Treasury Secretary to create an advisory committee tasked with providing advice and recommendations for the creation and development of non-governmental risk-sharing mechanisms for voluntarily reinsuring losses caused by terrorism. The Advisory Committee will be composed of nine members from the affected sectors of the insurance industry, including property and casualty insurance, reinsurance and alternative risk transfer sector. FIO Focus Issue 50 provides additional information on the Senate’s TRIA bill.

The legislation also includes the National Association of Registered Agents and Brokers (NARAB) Reform Act of 2014, which was attached by Senator Jon Tester (D-MO) and Senator Mike Johanns (R-NE). NARAB will provide a mechanism to ease multi-state licensing requirements for insurance producers. Under the legislation, NARAB will sunset two years after the association approves its first member.


NARAB will be an independent non-profit corporation established in the District of Columbia and governed by a 13-member board of directors. The board will be comprised of eight insurance commissioners, three individuals with expertise and experience in property and casualty insurance producer licensing, and two people with expertise and experience in life or health producer licensing.

NARAB Membership

  • Any producer that is licensed in the home state is eligible to be a member of NARAB, including business entities.
  • Membership will provide authorization to sell, solicit or negotiate in any non-resident state in which the member pays the requisite licensing fee.
  • Authority is limited to the lines of business for which the producer is licensed in the home state and includes “all such incidental powers” necessary to carry out such activities in every U.S. jurisdiction.
  • Incidental powers include claim adjustment and settlement to the extent permissible under the laws of the state as well as risk management, employee benefits advice, retirement planning or “any other insurance-related consulting activities.”
  • Members will be required to pay licensing fees required by any state in which they do business.
  • NARAB is to establish membership qualifications that are not “less protective to the public” than those contained in the National Association of Insurance Commissioners (NAIC) Producer Licensing Model Act.
  • The fact that some states do not require criminal background checks has historically been an obstacle for full reciprocity. A producer will not be eligible to become a member of NARAB unless the producer has undergone a national criminal background check, either in the preceding two years or upon applying to NARAB.
  • NARAB will notify the states and NAIC of new members, collect state licensing fees from members and remit those fees to the respective states. States will have 10 business days to provide NARAB with evidence that the producer does not meet the criteria for membership.

State Laws

  • The bill will preempt state laws that impose registration requirements on non-resident business entities that are NARAB members. This preemption would apply specifically to secretary of state registration requirements.
  • The bill does not affect state laws requiring appointments. Although NARAB members will not need licenses in every state, it appears that the bill will not affect an insurer’s obligation to appoint NARAB member producers in each state in which a producer sells, solicits or negotiates business on behalf of the insurer.
  • The bill specifically preserves state laws regulating market conduct, producer conduct, unfair trade practices and those establishing consumer protections. State insurance regulators will maintain their consumer protection and market conduct authority and will continue to handle consumer complaints involving producers. Complaints received by NARAB against its members will be referred to the respective state insurance departments.
  • States will retain the ability to take disciplinary action against producers who are NARAB members. Disciplinary action by a state may trigger the suspension or revocation of NARAB membership. States may not, however, discriminate against producers that are members of NARAB. States will also continue to handle consumer complaints involving producers. Complaints received by NARAB against its members will be referred to the respective state insurance regulator.

Legislation Requiring FIO to Study Illegal Steering or Redlining

On July 10, 2014, Rep. Lacy Clay (D-MO) introduced H.R. 5067, which will require the Federal Insurance Office (FIO) to study whether the insurance industry is engaging in illegal steering or redlining. The terms “steering” and “redlining” are not defined in the bill.

In carrying out the study, the legislation states that FIO should investigate insurance products, pricing, promotions and placements of services being offered to consumers. FIO is to report its findings and provide legislative recommendations to Congress within 180 days of the enactment of the bill.