Sorting out Prerogatives

Now playing on the floor of the U.S. House of Representatives is that feel-good legislative proposal of the year known as NARAB II. While most Roman-numeraled sequels fail to satisfy fans of the original, NARAB II solves this dilemma because there was never really a NARAB I to pale with in comparison.

By Steve Tuckey

Unless of course you count the vague threat held over heads of state to get on the reciprocal licensing band wagon, much like the blindness little boys face if they don't stop treating their bodies--in the immortal words of Estelle Costanza, the fictional character on the television sitcom Seinfeld--like an amusement park.

Well, enough states did get with the program but several years later are still faced with the blindness--I mean, the prospect of a national nonresident licensure agency known as the National Association of Registered Agents and Brokers.

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Little boys, take heed. While not quite stretching back to Mr. Lloyd's coffee shop, nonresident agent licensure requirements have been a thorn in the side of producers back to the days when the term generally referred to slimy types who oversold doomed-to-fail Broadway shows.

The proposed new agency would be a privately chartered corporation run under the aegis of the National Association of Insurance Commissioners, and in that regard it would resemble the new agency aimed at resolving the alien insurer collateral controversy. For a group that opposes federal regulation, NAIC has been asked to take on many tasks in conjunction with that effort.

NARAB II has been a long time coming. Gramm-Leach-Bliley legislation, tearing down the walls among insurers, bankers and securities guys, supposedly changed everything and was enacted in the waning days of the old millennium. But that concept proved as much a shibboleth as the notion two years later that Sept. 11 would change everything and we could invade countries without much consequence, or even seven years after that a certain crusading governor would change everything on Day One.

You get the idea. "Plus ça change," and all that sort of tommyrot.

So agents are still battling state bureaucrats aimed at preserving their fees to the tune of Bobby Brown's "It's My Prerogative."

I'm not sure, but I don't think this is what John C. Calhoun had in mind when he replied to Mr. Webster's toast in 1832 with: "The Union, next to our liberties, sir, is most dear." Will all you Googlers out there check if this is the first time those two names were mentioned in the same paragraph?

In any event, all this has been wrapped up with another solution to the problem of allowing insurers to compete on a global field, known as the Optional Federal Charter. OFC fans such as the American Insurance Association and the American Council of Life Insurers are against resurrecting NARAB, while foes such as the Big I and NAMIC are for it.

It starts to get complicated with the less-than-enthusiastic backing by the OFC champion CIAB, along with OFC agnostics such as the National Association of Insurance and Financial Advisors. And then there are the agnostics on both the OFC and NARAB such as the PCI. I'm sorry, but to these folks, all's I can say is, "You gotta believe!"

Some very smart people such as Joel Wood of the Council have tried to explain to me all the complexities that go into the interplay of these issues. But the pounding in my head got so severe that on this one issue alone I have decided to side with former Defense Secretary Donald Rumsfeld in declaring once and for all that I don't do nuance. It's my prerogative.

STEVE TUCKEY has written on insurance issues for a decade for several national media outlets.

June 1, 2008

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