Thursday, March 14, 2013

NARAB: A Blast from the Past

Gosh but I miss Ray. Years ago, one of our most popular CE classes was a comprehensive update of various legislative "accomplishments" in life and health insurance. Back in 1999, the Gramm-Leach Bliley Act (primarily focused on financial services) introduced the National Association of Registered Agents & Brokers (NARAB). We discussed it at length, specifically because there was already an organization which (it seemed to us) performed many of the intended functions.

Founded three years before GLB, the National Insurance Producer Registry (NIPR) was designed to function as a sort of national licensing clearinghouse for insurance agents. Interestingly, it's only been in the past few years that agents have been required to register for their National Producer Number (even now, individual states still issue licenses). It's not so much a regulatory body as a way to centralize a lot of costly administrative functions and allow folks both inside and outside the industry to track agent licensing.

It's "governed by a 13 member board of directors" including folks from the NAIC and the insurance industry.

Very interesting, Henry (not really), but why the heck are you regurgitating this?

Well, it seems that the NARAB idea never really died, and has been reincarnated as NARAB II. As Elizabeth Festa notes at LifeHealthPro:

"Bipartisan legislation to introduce National Association of Registered Agents & Brokers Act of 2013 (NARAB II), which would streamline the insurance agent licensing process legislation has been introduced in both the House and the Senate ... The new licensing entity, if created by law, would be governed by a 13-member panel of state regulators and insurance industry representatives." [emphasis added]

Looks familiar, no?

And what are the key benefits of this new agency? Well, that would be:

"[T]o create a national agent/broker licensing entity for nonresident licensing on a multistate level."

We should just call this the "Large Insurance Company Expense Relief Act."

Currently, large carriers (with national presence) find it expensive to administer the licensing requirements for its agents. The NARAB would not only duplicate many (most?) of the functions of the existing NIPR, but it would afford these large carriers a welcome break in their cost of doing business.

How's that, you ask?

Because it's industry-funded, which means a non-trivial portion will be borne by smaller, regional carriers to subsidize their larger competitors (whereas the NIPR generates the bulk of its revenue from access and transaction fees).

No wonder "the industry" loves it.
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