The Senate today passed S. 1926, the Homeowner Flood Insurance Affordability Act, which provides rate relief for homeowners who cannot afford the new flood insurance rate hikes that resulted from reforms enacted in 2012. Also included in the flood bill is the legislative text of a bill known as the National Association of Registered Agents and Brokers Reform Act (NARAB II). In September 2013, the House passed NARAB II by an overwhelming vote of 397 to 6. The Senate bill is a companion to the House bill.
NARAB II will establish a national licensing organization to allow agents to operate in multiple states more efficiently. An agent will still have to be licensed in his or her home state, and membership in NARAB will streamline the licensure process for every other state in which they choose to do business. NARAB maintains strict licensing and continuing education requirements, and preserves all regulation of insurance at the state level. It also provides an additional layer of consumer protection by requiring the agents who become members to undergo criminal background checks.
“Senate passage of NARAB II is a win for insurance agents and brokers, but more importantly it’s a win for consumers,” said NAIFA President John Nichols. “Relationships forged between agents and their clients are important and often last for decades. These relationships are built on trust, consumer confidence, and superior service. They shouldn’t have to end simply because a client moves to a different state. Under the bill, if your agent is a NARAB member and you move to another state, then you can keep your agent.”
A survey of NAIFA members revealed that they spend an average of 29 hours per year complying with insurance licensing requirements and an additional 28 hours on insurance-specific education courses. They spend on average more than $350 per year on insurance-specific continuing education courses.
The time and money spent on licensing adds up quickly for those who operate across state borders. But an agent’s failure to hold licenses in multiple states can harm their business, as well as consumers. Some 80 percent of NAIFA members say they have lost clients who moved to states in which they were not licensed.
Insurance agents and companies will continue to be regulated in all non-licensing matters by the state insurance agencies in the states where they do business. For a list of things NARAB II will and will not do, please see this NAIFA blog post.
NAIFA has officially supported the passage of NARAB legislation for years and has worked with industry partners, state regulators, and members of Congress on the issue.
“This is really the culmination of a long-term grassroots effort,” Nichols added. “NAIFA members have met numerous times with their senators and representatives on behalf of their industry and on behalf of consumers to explain how NARAB will benefit everyone. It’s great to see those efforts paying off.”
Because the flood rate reforms were enacted to make the National Flood Insurance Program actuarially sound, the status of a flood rate relief bill remains uncertain in the House. It is clear that there is wide spread support for providing relief, but some policymakers are concerned that delaying the reforms will perpetuate an unsustainable program. As the flood rate relief efforts continue, NAIFA urges the Members of the House of Representatives to reaffirm their support for NARAB and include the legislative text of the bill in any flood rate relief legislation.