In the past, if you were an insurance agency and you wanted to sell insurance in multiple states, you had to go and apply in every state. The process was costly, time consuming and crazy. It could take years and tens of thousands of dollars to get licensed in every state. After you were licensed, it required a lot of work (time and cost) filing annual statements and paying fees to stay licensed.
This was an anti-competitive hurdle to selling insurance. The reasons these hurdles existed is because the local insurance agencies did not want large multi-state agencies being able to compete with them and the insurance regulators wanted the fees and control over who was selling insurance.
But let’s be realistic, if you are licensed in NY where they did a criminal background check and investigation, why does Iowa need to repeat all this and make you wait 6 months, along with 48 other states.
This is just another reason why insurance is a fragmented and costly affair in the US to the detriment of the consumer. It is just another inefficiency resulting from the state control of insurance regulation.
The good news is they changed the law and by 2017, insurance agents will be able to go to the National Association of Registered Agents and Brokers and get licensed for all states in one place.
On 1-12-15 the President signed legislation establishing the National Association of Registered Agents and Brokers (NARAB). By 2017, any NARAB member licensed in her or his home state will be able to obtain a non-resident insurance producer license in any other state. This law will speed the licensing of insurance agents and brokers in states where they do business but do not reside.
NARAB will act as a central clearinghouse allowing an insurance agent in good standing in her or his home state to become licensed in every other state in which the agent wants to do business, as long as: 1) the agent has no criminal record 2) the agent pays the licensing fees and 3) the agent meets other qualifications for education, training and experience.