NARAB membership will be optional and insurance producers—agents, brokers and agencies—that wish to become NARAB members will have to first obtain resident licenses from their home states. Once licensed in their home state, insurance producers will be able to apply for NARAB membership and nonresident insurance licenses through the NARAB. The NARAB model differs from the traditional way of obtaining nonresident insurance licenses, which requires insurance producers to meet the various requirements of individual states.
To qualify for NARAB membership, insurance producers will be required to meet the membership criteria that will be established by the 13-member NARAB Board (Board). The Board will be formed in early 2015 and consist of state insurance commissioners and other insurance experts appointed by the president. All NARAB membership criteria must meet or exceed the highest professional requirements that currently exist in the states. The NARAB’s membership criteria will include requirements for personal qualifications, education, training and experience. Accordingly, on a practical level, producers will have to satisfy the highest licensing requirements currently required by individual states.
Individuals seeking to become NARAB members will be required to undergo a national criminal background check if their resident state does not already require one to become an insurance producer. NARAB members will still be responsible for paying state producer licensing fees as well as NARAB assessments to cover the organization’s administrative expenses.
Impact on State Insurance Regulations
Although the NARAB will have a significant role in the licensing of nonresident insurance producers, it will not replace or displace existing state insurance regulations. The law explicitly declares that state regulators will retain their regulatory authority over insurance producers.
On Jan. 13, 2015, Congress enacted legislation that creates the National Association of Registered Agents and Brokers (NARAB), a national insurance licensing clearinghouse for insurance professionals who want to register in and sell insurance outside of their home states. The NARAB is intended to streamline the licensing process for insurance producers that want to operate in multiple states. The NARAB plans to accomplish this goal by allowing producers to obtain nonresident state licenses in a single step under a single set of NARAB requirements. The NARAB will be set up and implemented over the course of 2015 and has been championed by many in the insurance industry.