"A better, and more complete approach to reforming insurance regulation would be to adopt the 'National Insurance Act,' legislation - S. 40 and H.R. 3200 -- already pending in Congress," said AIA president Marc Racicot.
The agent licensing legislation (known as "NARAB II"), would establish a District of Columbia-chartered nonprofit corporation called the "National Association of Registered Agents and Brokers" or NARAB, that would not be an arm of the federal government and would not have any day-to-day federal regulatory oversight.
"This raises serious questions about how and if NARAB II would work," stated Racicot. "It has the potential to be more confusing and intrusive than an optional federal charter because the bill displaces the entire state licensing system outside the producer's home state through membership in a private association."
"The National Insurance Act, in comparison, seeks to preserve the ability of insurers, reinsurers, and insurance producers to decide whether or not to opt for national regulatory oversight while not ousting the state regulatory system for those that opt to remain state regulated," Racicot said.
NARAB II only 'nationalizes' a narrow slice of insurance regulation -- the licensing of insurance producers. Even in that narrow slice, there are questions that need to be addressed concerning the delegation of agency-like functions and administrative deference to a private organization and what the states' disciplinary role will be. Other regulatory components such as market conduct oversight are, by design, left to state regulators to administer and enforce under the current 50-state framework.
"We continue to advocate for a holistic approach as embodied in the National Insurance Act, which provides for a single, uniform regulatory system for those that choose the federal option," Racicot concluded.