The National Association of Registered Agents and Brokers Reform Act of 2015 (NARAB Reform Act) amends the Gramm-Leach-Bliley Act and establishes the National Association of Registered Agents and Brokers (Association). The Association will be an independent nonprofit organization that will “provide a mechanism through which licensing, continuing education, and other nonresident insurance producer qualification requirements and conditions may be adopted and applied on a multi-state basis without affecting the laws, rules, and regulations, and preserving the rights of a State, pertaining to:” (1) licensing and other qualifications for insurance producers that are not members of the Association; (2) resident or nonresident producer appointment requirements; (3) supervising and disciplining resident and nonresident insurance producers; (4) establishing licensing fees for producers; and (5) prescribing and enforcing laws regulating the conduct of producers. §322, H.R. 26 (2015). The provisions of the bill take effect on the later of: (1) the expiration of the two-year period beginning on the day of the enactment of NARAB or (2) the date of incorporation of the Association.
The bill allows the Association to: (1) share documents, materials, and other information with states and the National Association of Insurance Commissioners (NAIC); (2) limit the sharing of information with the NAIC or any other non-governmental entity, in circumstances under which the Association determines that the sharing of such information is unnecessary to further the purpose of the NARAB Reform Act; (3) establish a clearinghouse for use by the Association and the states through which members may disclose their intent to operate in one or more states and pay the applicable licensing fees; and (4) establish a database or utilize the NAIC as a database for use by the Association or the states for the collection of regulatory information concerning producers.
There will be multiple classes of membership in the Association, including, but not limited to, business entity producer classes, depository institution classes, and licensed individual producer classes. Any insurance producer licensed in its home state, subject to certain standards (home state license cannot be suspended and must pass criminal background screening) is eligible to become a member. Various criteria may be established for membership, which may include personal qualification, education, training, and experience standards. However, no qualification for membership may be less protective to the public than that in the NAIC Producer Licensing Model Act, and the Association may consider the highest levels of producer qualifications established under various state licensing laws. Membership will be renewed on a biennial basis.
Membership will: (1) authorize the insurance producer to sell, solicit, and negotiate insurance in any state for which the member pays the licensing fee set by the state for any line or lines of insurance specified in the home state license; (2) be the equivalent of a nonresident insurance producer license for the purpose of engaging in insurance activities in any state where the member pays the licensing fees; and (3) be the equivalent of a nonresident producer license for purpose of subjecting the producer to all laws, regulations, and provisions of any state concerning enforcement, revocation and suspension of licenses.
The NARAB Reform Act shall not be construed as altering or affecting the applicability or continuing effectiveness of any state law or regulation to the extent such state law is not inconsistent with the NARAB Reform Act related to market entry for nonresident producers, and then only to the extent of the inconsistency. However, the laws and regulations of any state regarding market conduct, unfair trade practices, consumer protections, and appointment requirements will not be affected by the NARAB Reform Act. The bill expressly preempts state law, e.g., no state law shall:
In addition, only the producer’s home state shall impose licensing qualifications on the member (including personal qualification, education, training, experience, residence, bonding, and so forth) that are different from the criteria for membership in the Association; (2) impose any requirement that the member be licensed or registered or otherwise qualified to do business in the state, including that the producer register as a foreign company with the secretary of state; (3) require that a member submit a criminal history check as a condition of doing business in the state; and (4) impose any licensing, registration, or appointment requirement upon a member, or require a member to be authorized to operate as an insurance producer to sell, solicit, or negotiate for commercial property or casualty risks to an insured that is located in more than one state, if the member is licensed or authorized to operate in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state.
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Kevin G. Fitzgerald
Nicholas R. Paquette