Agent Groups Clash Over OFC

"Almost 4 years after the initial model was adopted, it has now just reached the point where it can become operational, and it will still take several months to get the organization up and running," Ludgin argued.

"And, when the benefits do start flowing to the public, millions of insurance consumers will be left out because the states in which they reside are not part of the compact," Ludgin said.

Under the NARAB-II proposed by Rusbuldt, a new private, non-profit entity responsible for agent/broker licensing would be created through federal law. It would be managed by a board that included state insurance regulators and industry representatives, including an independent agent.

Rusbuldt said in his piece that NARAB-II "would give agents and brokers a choice between the current state-by-state licensing system and a national licensing portal (as long as that producer is duly licensed in a state).

"Agents and brokers comfortable with the current system and those licensed in one or a couple of states could choose to remain licensed in the traditional manner with no outside interference," Rusbuldt suggested.

"Producers operating in multiple jurisdictions unhappy with the current licensing burdens, however, could opt for NARAB and the ease of national licensing through a Self-Regulatory Organization (SRO)-type entity separate and apart from the federal government," he said.

For producers already licensed in a state, NARAB would effectively create one-stop producer licensing for additional non-resident licenses, Rusbuldt argued.

"It would preempt state laws regulating non-resident insurance producer licensing if they discriminate against NARAB agents based on non-residency, or if they impose additional licensing requirements on non-resident NARAB agents beyond those established by the NARAB board," he said. "This would be a significant reform for all agents who have non-resident licenses, and it can be accomplished without a federal regulator."

Ludgin, however, disagreed. "Agents for Change believes in open markets, choice and competition," he said. "Any change must result in the best possible outcome for our customers.

A global marketplace

"An OFC is the right fix," he said.

"We live in a global marketplace," Ludgin added. "Shouldn't consumers be able to take advantage of competitive market forces in choosing their insurance, the same way they do in choosing their bank or credit card?"

Regarding Lott's proposal for an to the industry's anti-trust exemption, the linchpin for state insurance regulation, an industry lobbyist said it is a reaction to how the industry handled his claim for damages to his home in a coastal area of Mississippi as a result of Hurricane Katrina.

The lobbyist said Lott is "tapping into anti-insurance industry sentiment prompted by how the industry settled hurricane-related claims, and by the extremely hard market in those areas." The lobbyist added that, "Residents of those areas also feel they have been treated unfairly by the way the industry handled their claims."