Insurance companies have been around for hundreds of years. Early insurance companies in America found that the best way of distribution was through independent salespeople, or brokers, who would sell their products on their behalf for a commission of the sale.
However, back when states numbered just over a dozen and the West was still uncharted and wild, there was no need for a national streamline process for licensing brokers. Individual states were left to test, license, and discipline their own brokers. And that is the way it has been ever since.
A Dawn of a New Age
But now we live in the 21st Century where we have a global trade climate and major insurance sell their products in all states and internationally. Brokers who sell insurance in multiple states must be licensed in each and every state they do business. However, there is now legislation in the U.S. Congress to streamline the process for insurance broker licensing.
The current bill in the House of Representatives, HR 2554, would establish a National Association of Registered Agents and Brokers (NARAB) who would be responsible for creating a single set of licensing requirements for all insurance agents and brokers. NARAB would develop testing and licensing procedures, continuing education, and other standards for insurance producers which would be applicable in every state.
But would NARAB eliminate each state’s insurance agent oversight? Not at all. States would still be in charge of supervising and disciplining agents and brokers and to determine licensing fees for their state.
With so many insurance agents and brokers producing insurance sales in multiple states, it only seems reasonable that there be a national licensing standard. And since this is a unified partisan issue, watch for this bill to pass quickly and set into law by the end of 2009.
