[House Hearing, 107 Congress]
[From the U.S. Government Printing Office]

                            NARAB AND BEYOND



                               BEFORE THE

                            SUBCOMMITTEE ON
                    CAPITAL MARKETS, INSURANCE, AND 

                                 OF THE

                              COMMITTEE ON
                           FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                              MAY 16, 2001


       Printed for the use of the Committee on Financial Services

                           Serial No. 107-17

72-560                     WASHINGTON : 2001

 For sale by the Superintendent of Documents, U.S. Government Printing 
 Internet: bookstore.gpo.gov Phone: (202) 512-1800 Fax: (202) 512-2550
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                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 JOHN J. LaFALCE, New York
MARGE ROUKEMA, New Jersey, Vice      BARNEY FRANK, Massachusetts
    Chair                            PAUL E. KANJORSKI, Pennsylvania
DOUG BEREUTER, Nebraska              MAXINE WATERS, California
RICHARD H. BAKER, Louisiana          CAROLYN B. MALONEY, New York
SPENCER BACHUS, Alabama              LUIS V. GUTIERREZ, Illinois
MICHAEL N. CASTLE, Delaware          NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York              MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California          GARY L. ACKERMAN, New York
FRANK D. LUCAS, Oklahoma             KEN BENTSEN, Texas
ROBERT W. NEY, Ohio                  JAMES H. MALONEY, Connecticut
BOB BARR, Georgia                    DARLENE HOOLEY, Oregon
SUE W. KELLY, New York               JULIA CARSON, Indiana
RON PAUL, Texas                      BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio                MAX SANDLIN, Texas
CHRISTOPHER COX, California          GREGORY W. MEEKS, New York
DAVE WELDON, Florida                 BARBARA LEE, California
JIM RYUN, Kansas                     FRANK MASCARA, Pennsylvania
BOB RILEY, Alabama                   JAY INSLEE, Washington
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, North Carolina      CHARLES A. GONZALEZ, Texas
DOUG OSE, California                 STEPHANIE TUBBS JONES, Ohio
JUDY BIGGERT, Illinois               MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin                HAROLD E. FORD, Jr., Tennessee
PATRICK J. TOOMEY, Pennsylvania      RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       KEN LUCAS, Kentucky
JOHN B. SHADEGG, Arizona             RONNIE SHOWS, Mississippi
VITO FOSELLA, New York               JOSEPH CROWLEY, New York
GARY G. MILLER, California           WILLIAM LACY CLAY, Missiouri
ERIC CANTOR, Virginia                STEVE ISRAEL, New York
FELIX J. GRUCCI, Jr., New York       MIKE ROSS, Arizona
MELISSA A. HART, Pennsylvania         

             Terry Haines, Chief Counsel and Staff Director
            Subcommittee on Capital Markets, Insurance, and 
                    Government Sponsored Enterprises

                 RICHARD H. BAKER, Louisiana, Chairman

ROBERT W. NEY, Ohio, Vice Chairman   PAUL E. KANJORSKI, Pennsylvania
CHRISTOPHER COX, California          NYDIA M. VELAZQUEZ, New York
PAUL E. GILLMOR, Ohio                KEN BENTSEN, Texas
RON PAUL, Texas                      MAX SANDLIN, Texas
SPENCER BACHUS, Alabama              JAMES H. MALONEY, Connecticut
MICHAEL N. CASTLE, Delaware          DARLENE HOOLEY, Oregon
EDWARD R. ROYCE, California          FRANK MASCARA, Pennsylvania
FRANK D. LUCAS, Oklahoma             STEPHANIE TUBBS JONES, Ohio
BOB BARR, Georgia                    MICHAEL E. CAPUANO, Massachusetts
WALTER B. JONES, North Carolina      BRAD SHERMAN, California
JOHN B. SHADEGG, Arizona             JAY INSLEE, Washington
DAVE WELDON, Florida                 DENNIS MOORE, Kansas
JIM RYUN, Kansas                     CHARLES A. GONZALEZ, Texas
BOB RILEY, Alabama                   HAROLD E. FORD, Jr., Tennessee
VITO FOSSELLA, New York              RUBEN HINOJOSA, Texas
JUDY BIGGERT, Illinois               KEN LUCAS, Kentucky
GARY G. MILLER, California           RONNIE SHOWS, Mississippi
DOUG OSE, California                 JOSEPH CROWLEY, New York
PATRICK J. TOOMEY, Pennsylvania      STEVE ISRAEL, New York
MIKE FERGUSON, New Jersey            MIKE ROSS, Arizona
MELISSA A. HART, Pennsylvania

                            C O N T E N T S

Hearing held on:
    May 16, 2001.................................................     1
    May 16, 2001.................................................    29

                        Wednesday, May 16, 2001

Kelly, Hon. Sue W., a Member of Congress from the State of New 
  York...........................................................     3
Counselman, Albert R., CPCU, President, Riggs, Counselman, 
  Michaels & Downes, Baltimore, MD; Past Chairman, Council of 
  Insurance Agents and Brokers...................................     9
Kirven, Hon. William J., III, Commissioner of Insurance, State of 
  Colorado; Chair, Western Zone, National Association of 
  Insurance Commissioners; Co-Chair, NAIC's Financial Services 
  Modernization Working Group on NARAB...........................     7
Smith, Ronald A., CPCU, President, Smith, Sawyer & Smith, Inc., 
  Rochester, IN; State Government Affairs Chairman and Past 
  President, Independent Insurance Agents of America, on behalf 
  of the Independent Insurance Agents of America, the National 
  Association of Insurance and Financial Advisors, and the 
  National Association of Professional Insurance Agents..........    11


Prepared statements:
    Crowley, Hon. Joseph.........................................    30
    Oxley, Hon. Michael G........................................    35
    Kanjorski, Hon. Paul E.......................................    31
    Kelly, Hon. Sue W............................................    32
    Counselman, Albert R.........................................    47
    Kirven, Hon. William J., III.................................    36
    Smith, Ronald A..............................................    56

              Additional Material Submitted for the Record

Alliance of American Insurers, prepared statement................    65
National Conference of Insurance Legislators, letter, May 15, 
  2001...........................................................    72

                            NARAB AND BEYOND


                        WEDNESDAY, MAY 16, 2001

             U.S. House of Representatives,
        Subcommittee on Capital Markets, Insurance 
              and Government Sponsored Enterprises,
                           Committee on Financial Services,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:05 p.m., in 
room 2128, Rayburn House Office Building, Hon. Richard Baker, 
[chairman of the subcommittee], presiding.
    Present: Chairman Baker; Representatives Shays, Gillmor, 
Barr, Weldon, Biggert, Miller, Hart, Kanjorski, Maloney, Jones, 
Meeks, Inslee, Ford, Lucas of Kentucky, Shows, Crowley, Israel, 
and Ross.
    Also Present: Representative Kelly.
    Chairman Baker. We will go ahead and call our hearing to 
order. I wish to ask for unanimous consent that for today's 
hearing Mrs. Kelly be considered a Member of our subcommittee 
for the purposes of questioning the panel that follows and that 
she will be recognized pursuant to myself and Mr. Kanjorski for 
the purposes of pursuing that line of questioning. And that is 
without objection, of course.
    Today we have, I believe, the obligation to review the 
progress to date in meeting the goal established by the 
adoption of Gramm-Leach-Bliley in the harmonization of the 50-
State regulatory process for insurance agency licensing and 
marketing. I had the misfortune recently to sit down with some 
folks and look at a chart--that was an amazing piece of work--
that showed the regulatory requirements in order to seek and 
obtain approval for the marketing of an insurance product in 
each of the 50 States simultaneously, and it is indeed an 
overwhelming set of circumstances.
    Despite the fact that there is some comfort taken that to 
date, 21 States have agreed to reciprocity, there are several 
observations which I would like to make that I think give 
Members some concern. The 21 States frankly only represent 
about 30 percent of the licensed agents, and only 20 percent of 
the premium being paid. The standard to expect attaining is a 
national marketing system of uniformity; I think we are falling 
far short of our expectations.
    And therein also is an important point. My view of the 
provisions of Gramm-Leach-Bliley as a member of that conference 
committee is that it went beyond the question of just 
reciprocity. I went to the issue of uniformity, and that is 
indeed a different standard, so that we have much work to do. 
It is my hope that today, in the course of this hearing, we 
will hear from those who are engaged in this issue, NAIC and 
others, that there has been significant progress beyond the 
reported numbers. But certainly, the subcommittee will move 
very slowly in its actions and carefully listen to all affected 
    It would be my view that this would be an ongoing, long-
term project, not on a short-term paper we hand in tomorrow and 
walk away from, so that this hearing today marks the initiation 
of that process. I believe that this can be a productive 
endeavor and encourage those with the responsibility to work 
aggressively toward a harmonized standard, averting the need 
for the Congress to act in any other manner.
    With that, I would recognize Mr. Kanjorski for any opening 
statement he may choose to make.
    Mr. Kanjorski. Thank you, Mr. Chairman.
    One-half of the sand has now fallen through the hourglass, 
marking a time Congress gave the States under Gramm-Leach-
Bliley Act to establish reciprocity and uniformity thresholds 
for non-resident producer licensing. It is therefore 
appropriate and constructive for us to hold a hearing at this 
time on the efforts to date by the States to comply with the 
NARAB provisions contained in the 1999 law and the need for 
further Congressional action to improve the efficiency and 
effectiveness of the Nation's insurance industry. I therefore 
commend you, Mr. Chairman, for bringing these matters to the 
subcommittee's attention and for helping to educate our Members 
about the new jurisdiction. This hearing also represents the 
first time our subcommittee has substantively examined 
insurance issues in the 107th Congress.
    In an effort to allow an agent or broker to conduct 
business in more than one State using a single license, 
Congress included provisions to create the National Association 
of Registered Agents and Brokers, or NARAB, in the law to 
overhaul our Nation's financial services marketplace. These 
provisions require at least 29 States and territories to 
implement reciprocal or uniform standards for agents licensing 
by November 12th, 2002. If these jurisdictions fail to meet 
this deadline, the law then triggers the establishment of NARAB 
as a semiautonomous body managed and supervised by State 
insurance commissioners with the power to set and preempt 
certain State standards in order to create a national licensing 
standard for insurance. As I understand, the States, under the 
guidance of the National Association of Insurance 
Commissioners, have to date focused on meeting the reciprocity 
standards contained in the GLB Act while pursuing uniformity as 
a long-term goal.
    Last fall, the subcommittee on finance and hazardous waste 
held a hearing about the status of implementing the NARAB 
provisions of the Act. At that time, limited action had 
occurred and doubts existed about whether the States would meet 
the deadline. Since then, however, considerable progress has 
been made. According to the National Association of Insurance 
Commissioners, 21 States have now passed legislation seeking to 
satisfy the reciprocity requirements. As a result, it now 
appears likely that the States will preempt the creation of 
    From my perspective, streamlining the insurance licensing 
process represents an important first step in increasing the 
effectiveness and efficiency of our Nation's traditional system 
of State insurance regulation. The McCarran-Ferguson Act 
authorized States to regulate the insurance business, and 
Congress reaffirmed this system in the GLB Act. Absent 
continued advances in State efforts to streamline and increase 
uniformity in their insurance laws and regulations, however, 
some may, in the near future, encourage Congress to consider 
altering these statutory arrangements. The States must 
consequently continue to work proactively to modernize their 
systems for regulating the insurance marketplace.
    In closing, Mr. Chairman, I believe it important that we 
learn more about the views of the parties testifying before us 
today, and if necessary, work to further refine and improve the 
legal structures governing our Nation's insurance system. I 
also look forward to hearing from our witnesses about their 
impressions and to working with you in the future on insurance 
issues. Thank you, Mr. Chairman.
    [The prepared statement of Hon. Paul Kanjorksi can be found 
on page 31 in the appendix.]
    Chairman Baker. Thank you, Mr. Kanjorski.
    Mrs. Biggert, would you have an opening statement?
    Mrs. Biggert. No.
    Chairman Baker. At this time, then, I would recognize our 
first witness today is the Honorable Sue Kelly, Member of the 
subcommittee, and appreciate her longstanding interest in the 
subject of insurance uniformity and welcome you here today to 
make comments on this important topic. Thank you, Sue.

                   FROM THE STATE OF NEW YORK

    Mrs. Kelly. Thank you very much, Chairman Baker, Ranking 
Member Kanjorski and Members of the subcommittee. I want to 
thank you for inviting me to testify on the National 
Association of Registered Agents and Brokers, which is known as 
NARAB, section of the Gramm-Leach-Bliley Act. Let me begin by 
reading to you a quote which demonstrates both the desire of 
State regulators to achieve uniform licensing standards and the 
impediments to it: ``The commissioners are now fully prepared 
to go before their various legislative committees with 
recommendations for a system of insurance law which shall be 
the same in all States, not reciprocal but identical, not 
retaliatory, but uniform.''
    This statement expressing the clear desire for uniform 
insurance regulatory system was made by Mr. George W. Miller of 
the New York's Insurance Commissioner. He was the New York 
Insurance Commissioner who founded the National Association of 
Insurance Commissioners. Mr. Miller made this statement at the 
end of the very first meeting of NAIC in 1871. Since then, the 
NAIC has been working for 130 years to achieve some form of 
regulatory uniformity. I wish they could have solved the 
problem, but clearly, they have not.
    Some of the problems for agents and brokers who offer 
policies in more than their home State are simply the result of 
needless duplication, yet the root of many other problems is 
protectionism. I believe that the licensing laws affecting 
agents and brokers are among the most anachronistic. An 
overwhelming majority of commercial insurance is sold on an 
interstate basis, yet an agent or broker has to get upward of 
100 insurance licenses in order to market national insurance 
    More seriously, those agents encounter numerous obstacles 
that have been erected in States to protect in-State agents 
from out-of-State competition.
    Today's insurance business spans State and national 
borders, with an increasing emphasis on national insurance 
programs, multistate clients and cutting-edge technology. Yet 
today's agent licensing system is based on yesterday's market, 
one in which agents and their clients did business in their 
region and nowhere else. Agents who want to write a national 
insurance program have to procure and maintain licenses by 
line, class, producer and State. These agents are confronted 
with a mind-numbing minutiae of individual State licensing 
requirements, including such prerequisites as fingerprinting, 
certified copies of high school diplomas, printed notices in 
the local newspaper before an agency can get a license. These 
have nothing at all to do with the real insurance regulation or 
professionalism of its practitioners. Some States require 
corporate rather than individual agent licenses, which means 
the agency must be incorporated in the State where it wants to 
obtain a license.
    Other States will not permit any non-resident agent to 
solicit business in the State. In this time of increasing 
global competition, it is hard to lecture to our trading 
partners about opening markets when we still have these kinds 
of barriers to interstate domestic commerce. Together, we took 
an important step when we made NARAB a part of the Gramm-Leach-
Bliley bill. If 29 States can repeal their anticompetitive 
licensing laws by November of 2002 with the voluntary licensing 
clearinghouse, NARAB would create--it will not be implemented.
    In this way, the initiative operates as a sword of Damocles 
if a clear majority of States fail to repeat protectionist 
requirements. Let me be clear. We must not let the States stop 
at 29. We have to push further. We must take the next step 
beyond NARAB, and we must realize the goal set by Mr. Miller 
130 years ago, which is a goal of uniformity for 50 States and 
reach it before the end of this decade.
    As evidenced by the State's continuing effort to avoid 
NARAB implementation, the States will act if we give them the 
right incentive.
    I ask you today to join me in looking beyond NARAB today 
and calling for uniformity among the States. This way we can 
ensure that our insurance agents and brokers can focus on 
providing the best insurance service at the lowest cost to 
consumers, not continuing to hire extra staff in an attempt to 
comply with the staggering complexity of 50 insurance agencies 
and regulatory standards.
    I thank you very much for this opportunity, and I just want 
to take a moment to thank Chairman Oxley for taking up this 
fight in the Gramm-Leach-Bliley conference and getting this 
provision back in the bill. In addition, it would not have been 
possible without the support of you, Chairman Baker, who had 
perhaps the best statement of all in a conference when you 
spoke in favor of NARAB. I thank you very much for the 
opportunity to share my thoughts, and at this time I am glad to 
answer any questions that you might have.
    Chairman Baker. Thank you very much.
    [The prepared statement of Hon. Sue W. Kelly can be found 
on page 32 in the appendix.]
    Chairman Baker. Some have stated that as to Congressional 
activity on this subject, that Congress really hasn't had 
hearings scrutinizing NARAB operations or the concept of NARAB 
to any significant degree prior to the Gramm-Leach-Bliley 
considerations in conference. I know for a certainty that on 
the Banking Committee side of the formula in the decade-long 
debate of modernization, this was, in fact, a subject of 
repeated discussion. Do you have knowledge about the Commerce 
Committee's activities in this arena, and wasn't Chairman 
Oxley--a Chairman of the subcommittee of jurisdiction--an issue 
in which he had some longstanding interest?
    Mrs. Kelly. The Commerce Committee actually did have 
hearings, and we had hearings here in the banking committee at 
that time. I have a copy of George Reider's--the Connecticut 
insurance commissioner--testimony in front of our committee. 
That was on February 11th, 1999. He testified on NARAB and this 
is a copy of his testimony. Unfortunately, I can't say the same 
for some of the people, I suspect, who are saying that there 
were no hearings. There were.
    Chairman Baker. And the reason I bring that up, is the next 
step in critical comment is that we have too short a time line 
in which to address such a complicated matter. I don't think 
anybody, one, should have been taken by surprise, but is there 
a sufficient clock remaining, in your view, for this process to 
achieve productive-end conclusion?
    Mrs. Kelly. Chairman Baker, I am glad you asked that 
question. I think that we gave 3 years for the States to 
address the problem, and after about a year-and-a-half, 21 
States have acted on the problem. I think there is probably 
easily going to get that 29, because this is something whose 
time has come. So I think now we should go back and take a look 
at it and perhaps just move this out and do what Miller asked 
in his remarks 130 years ago, let us do it for all 50 States, 
because it just simply makes sense. In hindsight, I think 
perhaps we should have set that bar higher.
    Chairman Baker. And finally, the point of view that this is 
about companies engaging with producers and upsetting the apple 
cart at the State level, I am not, and I don't believe you are, 
an advocate of Federal regulation of insurance sales, but we do 
have to recognize that on the consumer side of the coin, new 
product development, competitive pricing and ultimately better 
service is the end goal of this. It is about making sure that 
the best products are available for whatever the consumer need 
might be, and having 50 arbitrary grocery stores in which you 
have to have a different list of rules to enter each store 
isn't in the consumer's best interest. I assume that is your 
motivation as well.
    Mrs. Kelly. I would agree with you. I think if we raise the 
bar, what we are doing is something that is really reasonable 
and is going to do a tremendous amount of good for the 
consumers, and it is the consumers who are benefiting from this 
piece of legislation.
    Chairman Baker. I want to express my appreciation for your 
willingness to participate and your longstanding interest and 
leadership on this issue as well.
    Mr. Kanjorski.
    Mr. Kanjorski. Mrs. Kelly, I think you make a good point, 
but I am more interested in learning what you would suggest for 
how we could raise the bar?
    Mrs. Kelly. I think we have perhaps set it at too low at 
the requirement for 29 States. We need to raise the bar. One of 
the concerns that I have is that we have some of the larger 
States engage in this as well. If we have a smaller States with 
smaller populations, we are not affecting everyone in the 
United States. Those larger States need to be a member of this 
community. We need to get them into uniformity, and it will 
help the consumers tremendously in those larger States as well.
    Mr. Kanjorski. But how would we raise the bar? What is the 
stick and what is the carrot?
    Mrs. Kelly. I am sorry. What were you----
    Mr. Kanjorski. What would be the stick and/or the carrot 
that we could use to accomplish raising the bar? California is 
not in. Pennsylvania is not in. Texas is not in. I agree with 
you that if we could only get 29 of the smaller States to stay 
in while 21 of the larger States stay out, we are not going to 
be terribly successful. But what would you utilize to 
accomplish greater reciprocity?
    Mrs. Kelly. I would think we could find a way to attach an 
additional bill that would open that number up to 50. You see, 
what has really happened here, when we did the NARAB and passed 
the NARAB bill, we essentially put a sword of Damocles over 
their heads. We gave them 3 years and said, either do this 
yourselves, or we will step in.
    Well, the end game of this has been that 21 States already, 
in a year-and-a-half, have stepped in and said, you know, this 
is really a good idea, we are going to do this. If we sort of 
give them that type of incentive again by finding a vehicle to 
attach a new piece of legislation that would open this a bit, 
all the way to the rest of the 50 States, I think we will get 
uniformity. And then I think it will be something that will 
inure to the benefit of the consumers.
    Mr. Kanjorski. I think it is an important issue, and I 
compliment you for your position.
    Mrs. Kelly. Thank you. These agents have to spend a lot of 
money getting these separated licenses, and that is only 
reflected in their fees.
    Chairman Baker. Mrs. Biggert.
    Mrs. Biggert. Thank you, Mr. Chairman. In your quote from 
1871, it was talking about uniformity. Do you think that you 
should just skip over--is uniformity your goal, and why 
wouldn't that be the standard to achieve the States rather than 
just to have the reciprocity as the first tactic?
    Mrs. Kelly. Uniformity is the goal, Mrs. Biggert. The idea 
of having uniformity is that it would, first of all, inure to 
the benefit of the consumer because of the cost of the agents. 
Right now, some of the things that the agents are required to 
do are just simply costly. If you, for instance, are requiring 
an agent, if they want to offer multistate insurance, they have 
to, in some instances, go out to a State and spend a week 
taking a course in another State that is not their home State, 
and that is perfectly understandable, but if the course doesn't 
add anything to their knowledge and is not enhancing their 
ability to offer their insurance in that State, it seems to be 
needless duplication. What NARAB would allow is a self-
regulating organization. We set the bar so that everybody is 
involved, allow them to self-regulate, and by their self-
regulation, it drops the cost to the consumers of the 
insurance. It seems to make sense.
    Mrs. Biggert. Thank you. Thank you, Mr. Chairman.
    Chairman Baker. Mr. Israel here, you are next. No 
    Mr. Israel. I have no questions right now, Mr. Chairman.
    Chairman Baker. Mr. Shows.
    Mr. Inslee.
    Mr. Inslee. No questions.
    Chairman Baker. I thank you for your willingness to 
participate and do appreciate your longstanding interest in 
this subject and look forward to continuing to work with you. 
Thank you.
    Mrs. Kelly. Thank you very much, Mr. Chairman.
    Chairman Baker. At this time I would invite the members of 
our second panel to please come forward. Welcome, gentlemen, 
and for the purposes of proceeding, each of your statements 
have been made part of the record. Please feel free to 
summarize as much as practicable. Constrain your remarks to 
maximize the opportunity for Members to ask questions, and we 
are pleased to recognize the Honorable William J. Kirven, 
Commissioner of Insurance for the State of Colorado and Co-
Chair of the National Association of Insurance Commissioners 
NARAB Working Group to speak here on behalf of the NAIC. 
Welcome, Mr. Kirven.

                       BEHALF OF THE NAIC

    Mr. Kirven. Thank you, Mr. Chairman. As you stated, Mr. 
Chairman, I am the Insurance Commissioner of the State of 
Colorado. I am the Chairman of the Western Zone, and Co-Chair--
    Chairman Baker. If you could pull that mike down a little 
    Mr. Kirven. And Co-Chair of the NAIC's Financial Services 
Modernization Working Group on NARAB. You do have my prepared 
testimony. What I would like to spend my 5 minutes addressing 
is the questions that were in the Chairman's letter that you 
sent to the NAIC.
    The first question is what are our long-term goals for 
streamlining producer licensing, and I think Congresswoman 
Kelly is absolutely right. If our long-term goal is uniformity, 
we realize that the reciprocity in 29 States is not really true 
and effective reform.
    The States are using a two-step process to approach the 
streamlining. It is our goal to achieve reciprocity in every 
State plus the District of Columbia, while moving to uniformity 
through the adoption of a Model Act, again, in every State. Not 
only does this involve revising State laws as necessary, but 
also developing and utilizing technology to implement a 
centralized process for agent licensing.
    In order to achieve these goals, in October of 2000 we 
completed the revisions to the Producer Licensing Model Act to 
make the model more consistent with the NARAB revisions of 
Gramm-Leach-Bliley. The States are now working to enact that 
model nationwide, and I will talk a minute in how we are coming 
on that.
    On the technology front, the NAIC is working through its 
non-profit affiliate, the National Insurance Producer Registry, 
to streamline the agent licensing process through the use of 
improved technology and a centralized producer database. And 
the goal here is to make it possible for State insurance 
regulators and producers to complete the non-resident licensing 
process for any number of States within a 24-hour period using 
a single application form.
    The current status of our reforms is the States are making 
strong progress. Twenty-one States have enacted the Producer 
Model Licensing Act or relevant portions of it. Four States 
have bills that are waiting their governor's signature. Another 
15 States have producer licensing legislation pending, and we 
anticipate another four or five States will introduce the 
legislation in the coming weeks. I was advised today, for 
example, that California has introduced a version of the Model 
    One other State intends to adopt regulations to implement 
the Model Act, and it is our understanding that the remaining 
States are either still considering legislation, or otherwise 
planning to do it in the next legislative session.
    Obviously, I think it would have been better if everyone 
had done it this session instead of cutting it so close, but 
there are people who are waiting until the next session.
    The fourth question you asked was how many jurisdictions 
have passed NARAB-compliant legislation, and what percent of 
the total premium do these jurisdictions represent. The initial 
process of certifying whether a State's producer licensing laws 
are compliant with the NARAB provisions is just now beginning. 
Of course, the NAIC was actively involved in the preparation of 
the legislation that was submitted to the legislators in the 
various States. As you understand, what gets submitted isn't 
necessarily what comes out at the back end of that process, and 
so now, the NAIC is preparing to examine the laws as they were 
enacted to determine whether or not they are, in fact, still 
compliant with the NARAB requirements. And that is, as you 
know, an obligation of the NAIC to make a determination as to 
whether or not the required number of States have, in fact, 
achieved reciprocity as required by GLB.
    As for determining the amount of premiums covered by States 
that are NARAB compliant, this is not something that we 
presently track, because it does not provide a relevant 
measuring stick. There is no meaningful correlation between the 
State's premium volume and the number of non-resident 
producers, which is what we are really talking about as far as 
efficiency and effectiveness of licensing. We prefer instead to 
look at the number of licensed agents of those States that are 
adopting the producer licensing model. In those States that 
have thus far enacted producer licensing legislation, this 
accounts for almost one-third of all licensed agents in the 
country, or nearly one million out of 2.9 million. If we add 
those States with bills awaiting their governor's signature and 
those States with pending bills in the legislative session, 
nearly 70 percent of the licensed agent population will be 
    There has been some reference to the size of the States, 
Mr. Chairman, and in fact, California, I think, in 1999, had 
roughly 238,000 total licensed agents, but only 44,000 of those 
were actually non-resident producers who were licensed.
    How many jurisdictions do we anticipate passing NARAB by 
the deadline? Obviously, we think that there will be in excess 
of the minimum of 29, and we are confident that we will have 
those minimum 29 on board, but again, we do not intend to stop 
there. We intend to achieve our goal of getting all 
jurisdictions to meet reciprocity and then move on ultimately 
to uniformity.
    With respect to measuring premiums affected by reciprocity, 
again, we have not found that to be a meaningful measure and do 
not really have data. Do we believe the potential creation of 
NARAB has assisted States in their efforts to enact agent 
licensing reforms? I think it is hard to say with any 
certainty. Certainly we started this process long before GLB 
was enacted, but it certainly gave focus to--and some 
inspiration to the effort that the NAIC has made, and I think 
that has been a very positive effect. I think it is important 
to keep in mind that State regulators were, in fact, working on 
agent licensing reforms well in advance of GLB.
    The last question you asked was to discuss the need for 
comprehensive uniformity in agent licensing. In March of 2000, 
almost all members of the NAIC signed off on a statement of 
intent, wherein they expressed their commitment to work toward 
implementing effective uniform producer licensing standards.
    Today, the NAIC's commitment remains as strong as ever. The 
NAIC, working with its affiliate, the National Insurance 
Producer Registry, is continuing to work with States to achieve 
a centralized electronic producer licensing process that will 
reduce the costs and the complexity of regulatory compliance 
related to the current multi-state process. Those concludes my 
    [The prepared statement of Hon. William J. Kirven III can 
be found on page 36 in the appendix.]
    Chairman Baker. Thank you very much, Mr. Kirven. I 
appreciate your responses.
    Our next participant is the past Chairman of the Council of 
Insurance Agents and Brokers, Mr. Albert Counselman. Welcome, 
Mr. Counselman.


    Mr. Counselman. Thank you. Good afternoon, Mr. Chairman and 
Members of the subcommittee. I am Skip Counselman, President of 
Riggs, Counselman, Michaels & Downes in Baltimore, Maryland. I 
am also past Chairman of the Council of Insurance Agents and 
Brokers. I am grateful for this second opportunity to testify 
on the issue of agent and broker licensing. I first testified 
before Chairman Oxley's Subcommittee on Finance and Hazardous 
Materials in July 1997 about 4 years ago.
    I would like to say that while I appreciate the efforts of 
the NAIC leadership and while I can see progress being made, 
the marketplace reality has changed little for a firm such as 
mine. I still am facing several of the same burdensome 
requirements that I faced 4 years ago, and little has been done 
to significantly streamline the licensing process for me and 
for my employees.
    In my prior testimony, I noted that I had to personally 
maintain 100 separate licenses. Today I still maintain 90 
licenses, not much of an improvement. The application process 
has gotten slightly better, as most States now accept the 
NAIC's uniform applications. However, many States still require 
additional documentation beyond what is requested on those 
forms. And even though I hold a non-resident agent license in 
Texas, for example, I still may not solicit business from any 
Texas resident. So as you can see, not much has changed in the 
last 4 years.
    With that said, I think that the enactment of NARAB 
provisions of the Gramm-Leach-Bliley Act had a positive effect 
on State's efforts to enact licensing reforms. It was only 
after the enactment of NARAB that the States got serious about 
enacting these reforms.
    It is highly unlikely that States would have moved this 
quickly without the Bunsen Burner effect of NARAB giving them a 
jump start, especially when you consider the fact that our 
association formed its first committee to work on licensing 
reforms more than 60 years ago. NARAB was a true provision of 
modernization in the Gramm-Leach-Bliley Act. Were it not for 
the tenacious support and initiatives from Congresswoman Kelly, 
the leadership of Chairman Oxley and your active support of 
NARAB in conference, Mr. Chairman, things assuredly would not 
be changing for the better, particularly at their current pace.
    This initiative was bipartisan and provides a very good 
model for a carrot-and-stick approach that can effectively move 
insurance regulation forward toward goals of efficiency. As 
this subcommittee explores the options for improving 
harmonization of State laws, we would urge you to recognize the 
progress that has been achieved through NARAB, even though 
regulators strongly opposed its passage at the time. The 
Council appreciates the progress that has been made in 
reforming the licensing system, but we believe that we are only 
at the beginning of the road.
    After NARAB's enactment, the NAIC pledged to go further 
than NARAB in reforming the licensing system and to secure not 
only reciprocity of all licensing jurisdictions, but also 
uniformity of licensing laws in all jurisdictions.
    It is a virtual certainty that a majority of these 
jurisdictions will enact the necessary legislation to meet 
NARAB's reciprocity requirements. However, there are some 
questions as to whether NAIC will reach its initial goal of 
reciprocity in all jurisdictions.
    The Council is very concerned about this prospect. While 20 
States have enacted laws that meet the reciprocity standard, 
those States account for only 20 percent of the total premium 
in the U.S. Council members represent only the top one percent 
of agents and brokers, but place over 80 percent of all 
commercial insurance business in the U.S., and if only 29 
States enact the necessary laws, a large number of agents and 
brokers will not actually be benefitting from the NARAB 
regulations and proposals.
    The Council continues to have concerns about States such as 
California, Texas, Florida and New York. The Council firmly 
leaves that increased uniformity of licensing laws is the key 
to full acceptance of non-resident licensing reciprocity. This 
is why we have consistently supported States enactment of 
NAIC's Producer Licensing Model Act, because it brings State 
agent and broker licensing laws much closer to uniformity than 
they have ever been before.
    However, there is still a need for the States to go 
further. For example, there is the issue of tenure and renewal 
dates in all 50 States. There is the issue of countersignature 
laws, which still exist, which are protectionist in several 
    Mr. Chairman, I wish to thank you for holding this hearing 
today, but we would also like to note that the battle must 
continue forward on this issue. As you consider options, we ask 
that you consider what appropriate issues should be considered 
so that all jurisdictions representing 100 percent of premium 
volume benefit by uniformity throughout the country. Thank you 
for this opportunity and for your leadership on this important 
    [The prepared statement of Albert R. Counselman can be 
found on page 47 in the appendix.]
    Chairman Baker. Thank you, Mr. Counselman.
    Our next witness is Mr. Ronald Smith, here today in his 
capacity as Chair of State Government Affairs and past 
President of the Independent Insurance Agents of America, as 
well as participating on behalf of the National Association of 
Insurance and Financial Advisors and the National Association 
of Professional Insurance Agents. Welcome, Mr. Smith.

                        INSURANCE AGENTS

    Mr. Smith. Thank you, Chairman Baker. Chairman Baker, 
Ranking Member Kanjorski and Members of the Subcommittee, good 
afternoon. I am Ron Smith. I am an insurance agent from 
Rochester, Indiana, and I am representing the Independent 
Insurance Agents of America, the National Association of 
Insurance and Financial Advisers and the Professional Insurance 
    No segment of the industry is affected more by licensing 
laws than our diverse membership, and no group is impacted more 
by the reforms we are discussing today.
    Despite our longstanding support for State regulation and 
effective licensing laws, we feel the current licensing system 
does not operate as efficiently as it should. For this reason, 
we have led the effort to streamline the licensing process, and 
we have pushed for increased uniformity across State lines.
    The passage of the NARAB provisions assured our members 
that effective licensing reform was finally eminent. It has now 
been 18 months since the enactment of the Gramm-Leach-Bliley 
Act, and we are halfway to the NARAB deadline. The associations 
that I represent have a presence in every State capital. And 
our members and affiliates have been working closely with State 
lawmakers to enact reform.
    This partnership has resulted in a staggering amount of 
reform in a short period of time. Because of these efforts, the 
NARAB threshold of 29 States will be cleared, we believe, 
before the end of 2001 over 1 year ahead of the timetable 
established by Gramm-Leach. Our success at the State level 
cannot be overstated. Here are some of the numbers.
    Twenty-one States, as have been mentioned, have enacted 
significant reciprocity and uniformity laws. We believe there 
are 10 additional States that have passed reform bills through 
both legislative chambers, and if those bills become laws, that 
will mean approximately 31 States which account for almost 50 
percent of all licensed individuals and almost 45 percent of 
the country's total property and casualty insurance premiums. 
We think that will happen yet this year. Many other States are 
currently considering licensing reform bills, and by the end of 
this year, we anticipate that over 45 States will have 
considered licensing reform legislation.
    We think we have made some progress. Given the pace of 
activity that has occurred, it is now clear that the creation 
of NARAB will be averted. We commend the hundreds of State 
legislators who have worked diligently on insurance license and 
reform over the last several months. They have clearly done 
their part to modernize insurance regulation.
    While the accomplishments of the last several months are 
impressive, we intend to keep the pressure on. Our 
organizations believe it is essential that we have national 
reform. Reaching the statutory bare minimum is not good enough, 
and we will not settle for reform in only 29 States. Instead, 
we will continue to push for reform in all States, both prior 
to and after the November 2002 deadline.
    Some in our industry suggest that the process is 
insufficient, because larger States have not yet acted. We are 
a little more optimistic on that point. We believe that several 
large States will be taking some action. 41 States will adjourn 
by August of this year in their State legislatures, and we 
anticipate that at least 35 of those States will have taken at 
least some action this year. Most of the remaining States, 
including the largest States, have legislative sessions that 
continue on an ongoing basis. These additional States include 
New York, California, Illinois, Pennsylvania, Michigan, Ohio 
and New Jersey. Each of these States is now working to enact 
licensing reform, and we are optimistic that several of these 
States will get something done, maybe even this year. Effective 
and meaningful reform must be national in scope, and it is 
essential that the largest States be part of the mix.
    By enacting the NARAB provisions, Congress took affirmative 
steps to ensure that insurance agents would have access to a 
streamlined and functional licensing mechanism. While we have 
consistently argued that the States were up to the challenge, 
we are nevertheless pleased with the results so far. We must 
continue, however, to build on this progress and gain enactment 
of similar reforms in the remaining States. We are confident 
that this will occur and we will continue to work closely with 
State policymakers to achieve meaningfullicensing reform on a 
national basis.
    On behalf of IIAA, NAFIA, and PIA, I thank you for this 
opportunity to present our views. We look forward to working 
with this subcommittee in any capacity needed. Thank you.
    [The prepared statement of Ronald A. Smith can be found on 
page 56 in the appendix.]
    Chairman Baker. Thank you very much, Mr. Smith.
    Mr. Kirven, I want to start with what appears to be 
differing views about the real direction of the provision 
within Gramm-Leach-Bliley and whether or not there was clear 
enough direction in the language of the Act to understand the 
    And this is just my perspective. I can't speak for all 
members of the conference, and certainly Mrs. Kelly probably 
has her own view. But reciprocity is something different from 
uniformity, and when we sat around that table talking about the 
marketing of products, it, I believe, was with a view toward 
the goal of uniformity. You then went on to say that the Gramm-
Leach-Bliley requirement was not the initiation of the effort, 
but it certainly was an incentivizer to the overall activity.
    Do you think that we--pending the current target of 
November, 2002, nothing will alter that event--need to start 
thinking about another incentive program for uniformity?
    Mr. Kirven. From the NAIC's perspective, I would hope that 
you would not. I think the NAIC itself is committed to 
uniformity. We want all jurisdictions to have a uniform 
application process where you simply file one application and 
you can get licensed in any State in the Union. We have a 
strong incentive to do that.
    As you have noted, Mr. Chairman, there are some States that 
still have, for example, countersignature laws in effect. I 
agree that those are certainly economic protection. And in 
certain States, apparently the agents--we need their 
cooperation, and we need to have their support to change some 
of those things, and if they don't, then that is certainly a 
problem for us.
    I don't think it is any secret that the most difficult part 
of this process for us is having to go to each of these 
legislatures, introduce a bill and everybody has their ideas 
and it is our system on how that can best be accomplished. And 
sometimes what we put in as a Model Act doesn't exactly look 
like a Model Act when it comes out.
    That is a difficult issue for us. I think we have made 
great progress to date doing that, but I want there to be no 
question that the NAIC's goal is clearly uniformity. We have 
never felt that reciprocity was an end in it. But we also 
realized, given the timeframe and given the amount of work that 
we have to do with these legislatures, that reciprocity would 
certainly help us beat the clock, so to speak.
    But I would certainly not--and I don't think the 
organization will tolerate--say, ``Well, we made that deadline, 
let us keep trying.'' I think we are going to push ahead for 
    Chairman Baker. Well, as a longstanding member of the 
Louisiana legislature, I have good reason to have my concerns 
about our ability to achieve certain goals.
    I would point to the fact that almost every bill that is 
passed in the legislature has the proviso, except for the 
Parish of Orleans. Even the rules of time apparently don't 
apply to Orleans Parish any longer. So for those reasons and 
the fact that you observed that it was some modest assistance 
in focusing the organization's attention, for what it is worth, 
if it helps, just let them know that somebody else is talking 
about additional interest in the matter, should progress not 
achieve desired goals.
    Mr. Counselman, you indicated you have approximately 90 
licenses today, as opposed to a hundred. How does that occur, 
and what do you perceive from the market side is the difficulty 
in the larger States coming on board?
    Mr. Counselman. Thank you, Mr. Chairman.
    Ninety as opposed to a hundred is because of the good 
cooperation from some of my associates in my own company. We 
have a total of 190 non-resident licenses for people in my 
company. We operate in one location in Baltimore, in one State; 
and so some of my associates have additional licenses that I 
used to hold exclusively. So the streamlining of 10 percent 
isn't really streamlining. It is just some of my associates are 
carrying those----
    Chairman Baker. You were just trying to be nice, I guess.
    Mr. Counselman. Right. I am trying to be precise.
    But the uniformity is the major issue, because even if we 
have licenses in all of these States, we are not fulfilling the 
identical requirements in those different States. The 
applications are different, and the requirements are different. 
For example, in criminal background checks, it seems like a 
reasonable thing to require. The manner in which that 
information is gathered for the different States is not 
    Chairman Baker. I thank you very much. My time has expired.
    Mr. Kanjorski.
    Mr. Kanjorski. I am trying to understand that issue better. 
When you say that you will meet the requirement that 29 States 
will pass laws by the deadline, you are only talking about 
reciprocity. You are not talking about uniformity. Is that a 
correct assessment of your accomplishment in the 3-year 
    Mr. Kirven. Yes. I am talking about 29 States' reciprocity. 
We will exceed that goal, but our real goal is 50 States for 
    Mr. Kanjorski. After the 3-year period, how much uniformity 
are you going to have?
    Mr. Kirven. Well, actually, the Model Act is designed to 
create a lot of uniformity now. It does a dual purpose. It also 
establishes reciprocity, but it goes on to establish 
definitions of the various lines in commonality among the 
States that adopt it. So it is, in fact, a start toward 
uniformity; and if everybody adopted the Model Act, I think we 
could probably safely say we had uniformity.
    Mr. Kanjorski. How many States have adopted the uniform 
    Mr. Kirven. Twenty-one States. Ten, I think, are through 
both houses awaiting governors' signatures.
    Mr. Kanjorski. That is the Model Act itself?
    Mr. Kirven. That is the Model Act.
    Mr. Kanjorski. So you will have both reciprocity and 
    Mr. Kirven. For the most part in those. We have to look at 
those. When we put them in, they are the Model Act; and when 
they come out, there have been some changes to them as they go 
through the process. And that is what the NAIC is going to do 
as part of its compliance process, is to look at the enacted 
laws to see how compliant they are with the minimum standards 
that we have for uniformity.
    Mr. Kanjorski. How soon will that analysis be finished?
    Mr. Kirven. Well, the working group, which I cochair, is in 
the process right now of establishing a checklist of each item 
that must be in the State laws to meet our requirements for 
determination that they are compliant with reciprocity. We are 
going to work on that at the June meeting. So we will start 
this summer. And we would be glad to share with the 
subcommittee our progress on certifying those States.
    Mr. Kanjorski. Could you do that? I think it would be very 
helpful to us.
    Mr. Kirven. OK.
    Mr. Kanjorski. Mr. Smith, I know you are trying to walk a 
fine line here, being optimistic and favorable, but I sort of 
heard a little hesitancy in your testimony. When the day is 
done, are we really not going to accomplish what we are looking 
    Mr. Smith. I think there is a big difference between 
reciprocity and uniformity, and our association has always felt 
that way. We worked extremely hard on the Model Act. We spent a 
lot of time, effort and energy on the language in the Model 
Act. There were some attempts to change that language. We were 
effective in fighting those off, because we thought the changes 
were harmful to consumers. And so, quite frankly, we have been 
a little disappointed in what has come out of some of the State 
    We would look forward to working with this subcommittee, if 
that need be, to reach the goal of uniformity. There is no 
question that that is where we should be.
    I live in a community of 7,000 people in north central 
Indiana. I have 15 licenses around the various States and 
actually deal with my largest client, who happens to be in the 
State of Florida. So this is not just something that affects 
big brokers. It affects smaller agents and brokers like myself 
who happen to have clients that deal all around the country.
    Mr. Kanjorski. Is this delay done for protectionism, or is 
it that every State wants to feel they have a right to be 
unique and a little different?
    Mr. Smith. I think there has been a lot of protectionism in 
the past, particularly countersignature laws. We are basically 
now down to five States. We think one of those is going to get 
rid of their countersignature law. But it has been very 
    I think now several States believe that they have one or 
two ingredients that for their State is crucial in the 
licensing process, but yet for the vast majority of States, it 
is not deemed crucial--criminal background checks and some 
things like that. That is where in particular I think some of 
the larger States have been hung up on their passage of the 
Model Act. So that is why we maintain a certain degree of 
optimism, because we do have associations in each of those 
States working with the State legislatures and the NAIC to see 
if we can't reach some compromises there.
    Mr. Kanjorski. Mr. Counselman, is it your hope that you are 
going to go down from the 90 licenses that you now own to just 
    Mr. Counselman. I would hope I would go to one.
    Mr. Kanjorski. Can any of you give me an idea about when 
you have 90 licenses, what does it cost you?
    Mr. Counselman. It is different in every State. On average, 
it is probably about $100. It could be as little as $25 or as 
much as $150, but in addition some States have bond 
requirements, and that could be $100 to $500 in addition.
    Mr. Kanjorski. It seems to me that you are talking about 
thousands of dollars for your agency.
    Mr. Counselman. I am talking for my own firm in excess of 
$100,000, and for me just with 90 licenses, I am talking 
thousands of dollars. But when you multiply that by the 
literally millions of agents across the country, it is a very 
major issue. And the time it takes to fill out those 
applications, somebody has to take the time to do it at work.
    Mr. Kanjorski. Very good. Thank you, Mr. Chairman.
    Chairman Baker. Thank you, Mr. Kanjorski.
    Mrs. Kelly.
    Mrs. Kelly. Thank you, Mr. Chairman.
    Mr. Kirven, you are talking about your your group, is the 
NAIC really agreeing with this goal that we are trying to 
achieve with NARAB?
    Mr. Kirven. Yes.
    Mrs. Kelly. Well, if you agree with the goal, it seems to 
me that 130 years is a long time to try to enlarge this 
question and try to push it. I would like to know when you 
think we will have uniformity. What is your stated goal at this 
point in terms of time in all of the States? In 3 years? Five 
years? Six months? What are we talking about?
    Mr. Kirven. Well, I would think that if we can reach the 
reciprocity level in 3 years, I don't know why we couldn't--and 
this is my personal opinion. We don't have a fixed date. I 
don't know why we couldn't try and achieve uniformity within 
the next 3 years.
    Mrs. Kelly. Well, I am asking you about all 50 States, sir, 
not just the fact that we put the 29 States in as a goal.
    Mr. Kirven. I understand, Congresswoman Kelly. I said--if 
it took us 3 years to reach 29 as a minimum, which we will 
reach more than that, I would hope within another 3 years we 
can reach uniformity, because it takes--you know, GLB was 
passed in November of 1999 I think. That was really too late to 
get bills ready for introduction in the 2000 session. So in 
Colorado we did it the very first session we could, which was 
this year, got it done and passed. Some States are waiting, but 
I would think that, if we need to make more changes, we will 
need 3 years as a reasonable amount of time to finalize, fine-
tune uniformity on some of the acts now that may not come out 
    Mrs. Kelly. Do you think this would have occurred without 
the NARAB legislation, without that sword of Damocles? We have 
given NAIC quite some time, 130 years.
    Mr. Kirven. I think that certainly the act has given 
impetus to an effort that was ongoing. People talk about how 
lately the NAIC is moving at light speed, and I guess that 
proves Einstein's Theory of Relativity. It took us 130 years to 
do some things. Lately, we have done a few in a couple of 
years. So we are picking up some momentum, Congresswoman Kelly, 
and I think that we will continue to maintain this. I think 
there has just been a real hard look at all of our efforts, 
speed-to-market issues that the Chairman has referred to.
    I certainly as an--coming from private industry and coming 
into this job have realized that this system is very balkanized 
and very redundant and really needs to be reformed. I am very 
committed to that, and I think that my colleagues in the NAIC 
are committed as well.
    Having said that, though, no matter how much we agree, we 
still have to go to our State legislator to change our laws in 
a lot of cases, and we want them to be uniform across the 
country. And my personal opinion is, is that, yes, we may need 
some help with some pre-emption of countersignature laws. If 
some States can't just seem to get it done, then perhaps we 
will need some kind of a pre-emption which will make them get 
rid of the countersignature laws so we can get to uniformity. 
What I would like to see you do is give us adequate time, as 
you have, to make our best efforts to accomplish this goal.
    Mrs. Kelly. I am sure that we would all be very happy to 
try to help you. When you say adequate time, I am just looking 
at the time line you have had before--and I don't mean to beat 
a dead horse here. Certainly I appreciate your coming here to 
testify, but I am concerned, because I think that the time has 
come for us to have a uniformity. There has been 130 years. 
When do you think the NAIC is going to have comprehensive 
uniform standards for the States to follow beyond the limited 
uniformity parameters that are in the Producer Licensing Model 
Act? Do you think that is going to be coming soon?
    Mr. Kirven. I think our Producer Licensing Model Act goes a 
long way toward achieving uniformity today in its present form 
if we can get it adopted in all of the States.
    Mrs. Kelly. But I asked you about a comprehensive uniform 
standard. I am not talking about reciprocity and not talking 
about models. I am talking about real standards for real 
    Mr. Kirven. And I am talking about the same thing. The 
Model Act has more than just reciprocity set forth in it. It 
has certain well-defined lines of business and how to be 
licensed and what the criteria are and the educational 
requirements. So we can make that on a uniform application 
across the country. It would be a uniform filing basis.
    Mrs. Kelly. My trouble here is the comprehensiveness of it. 
I hope that you will work extremely quickly to accomplish the 
goal, but I appreciate the fact that you are looking for us to 
help you. I am sure we are very happy to help you.
    And I thank you, Mr. Chairman, for allowing me to appear 
here today.
    Chairman Baker. Thank you, Mrs. Kelly.
    Mr. Israel.
    Mr. Israel. Thank you, Mr. Chairman.
    Mr. Smith, you noted in your testimony that we should not 
settle for reform in only 29 States, we have to go beyond that, 
and that you are optimistic that this year we will have more 
than 29 States. We are talking about the large market States 
like California, Texas, Florida that have high premium value, 
lots of agents and brokers. In addition to being optimistic, 
can you tell me specifically what steps your organizations are 
taking in order to bring these jurisdictions on board?
    Mr. Smith. It is a little bit different in every State, 
because it depends on the views of all the people in that 
    For instance, Texas. Texas has passed the bill, and it has 
gone through both the house and senate in Texas, but we are not 
sure that it is going to be compliant or the NAIC will consider 
it compliant for purposes of uniformity or reciprocity. 
However, it would help the vast majority of agents and non-
resident agents that would apply to the State of Texas.
    California has some particular things that they require of 
their resident brokers that they think if they just pass the 
uniform model that they will actually be letting non-resident 
agents operate in their State on a basis that is much less 
comprehensive than their own residents are required to meet.
    So those are two instances where some of the 
particularities in those States--we are working with our 
lobbyists in those States, we are working with the NAIC in 
those States, and then working with NCOIL and various 
legislative groups in the various States. So to get into 
particulars, every State is just a little bit different, and it 
is their own feeling about some of those things that we are 
trying to help overcome.
    Mr. Israel. The three organizations that you represent, 
IIAA, NAIFA, and PIA, are active in California, Florida, Texas. 
Are you playing an active role in encouraging those States to 
come on board?
    Mr. Smith. Yes, absolutely.
    Mr. Israel. Thank you, Mr. Chairman.
    Chairman Baker. Thank you, Mr. Israel.
    Mr. Barr.
    Mr. Barr. Thank you, Mr. Chairman.
    Could you update me--and I apologize if this came up 
earlier in the testimony; I was at a separate hearing--on what 
is going on with California, Texas and Louisiana, I think?
    Mr. Smith. Louisiana, I believe, has passed the Model Act.
    Texas has passed both houses of the legislature. Again, I 
restate I am not exactly sure that that will be considered NAIC 
compliant. They had a couple little pieces in it.
    California, we are working diligently with, as we speak. As 
a matter of fact, our lobbyists here that works with me, Wes 
Bissett behind me, spoke with their lobbyists yesterday on the 
    And I think Ohio is another State that we might mention. 
The commissioner there, Lee Covington, is a strong supporter of 
this. But yet in Ohio they have had some very substantive 
discussions about budgets and things like that; and this 
legislation, quite frankly, has tended to hit toward the bottom 
of the barrel. So we are optimistic that later in this year we 
might get something done in Ohio.
    So we are working as hard as we can in all of those States 
with our lobbyists. Our national association has affiliates in 
all 50 States, and that is who we work with through our 
affiliates there.
    Mr. Barr. So Louisiana, that has been signed?
    Mr. Smith. No. Passed. It has passed and has gone to the 
governor. It has not been signed yet.
    Mr. Barr. And in Texas, similarly?
    Mr. Smith. Yes.
    Mr. Barr. Are there still some problems remaining in the 
language of the Texas bill?
    Mr. Kirven. I believe that is correct. It is not compliant 
with the Model Act, and I am going to talk to the commissioner 
about that.
    Mr. Barr. Is there going to be some effort to change that, 
or is it too late, if it has passed both houses?
    Mr. Kirven. I know that while I am here I am going to talk 
to someone about what issues we don't feel are compliant and 
talk to the commissioner and see if we can't have some of those 
revisited. I don't know if it is in conference committee or how 
we can do that, but we are going to try and talk to Texas and 
see if we can't make them change the bill to be more compliant 
with the Model Act.
    Mr. Barr. I guess you can talk to them, but not mess with 
    Mr. Kirven. That is correct.
    Mr. Barr. And California is just being California or----
    Mr. Smith. Wes says that the bill is in committee and may 
very well be moving forward soon.
    Mr. Kirven. Congressman, if I may----
    Mr. Barr. Are you all optimistic that we will see it move 
through the California legislative system this year?
    Mr. Kirven. Mr. Chair, can I--Congressman, I--one of the 
biggest things we have in California is they have a fingerprint 
check, and they use it. So a lot of States have it. They put 
them in a folder, and they never look at them, but California 
apparently does. That is an add-on under the reciprocity thing. 
It is not allowed, and California refuses to give it up. I 
think maybe roughly 14 States even have requirement, and so we 
are a little stuck there.
    California won't meet reciprocity because they have an 
additional requirement to fingerprint, and yet it also is not 
uniform across the country. But we are working through NIPR to 
try and--work so we can get an electronic fingerprint one time.
    For example, if--and Mr. Counselman wants to be licensed in 
50 States, and if we have his one electronic fingerprint, we 
can check it once, pay one data access fee for the database, 
which is $24 or $25, and spread that cost across all 50 States. 
So we hope to recognize savings, and we always have his print 
there. We will only have to check it once for every State and 
at least make that available to the States that want to use it.
    So we are trying to do workarounds on some of these issues, 
but it is difficult. Some States don't want to give that up. I 
wouldn't argue it is not a valid consumer protection.
    Mr. Barr. Well, thank y'all very much. We appreciate your 
efforts; and if we can be of any help, let us know. Thank you.
    Chairman Baker. Thank you, Mr. Barr.
    Mrs. Jones.
    Mrs. Jones. Mr. Chairman, I come from Ohio. I am not quite 
sure what we are doing, but we are trying to fund education in 
Ohio. That is our top priority for our legislature right now.
    I have a couple questions. You say there are five States 
who have not done something. I think that was you, Mr. Smith. 
Was that part of your--one of you said----
    Mr. Smith. I referred to several States, and we are hopeful 
that at least 45 will have taken at least some action by the 
time their legislatures come back. So, yes, there are four or 
five that have not really addressed the issue yet.
    Mrs. Jones. And can you tell me who they are? Not if you 
    Mr. Smith. We can get you a list. We will be happy to share 
our list. We have a list of all the States and the activities 
that we think are taking place. We will be happy to share that 
list with you.
    Mrs. Jones. Just so I am clear on--and we are using the 
same terminology, can one of you define what you mean by 
countersignature laws?
    Mr. Counselman. I can describe how it impacts on the sale 
of insurance, an example would be Florida, because they are 
famous for their countersignature law. If I as an out-of-State 
agent write some business in the State of Florida, I have to 
have that policy signed or, more specifically, countersigned by 
a resident Florida agent. Florida also requires the payment of 
50 percent of the commission, regardless of whether the agent 
actually participated in the transaction.
    Mrs. Jones. Now, when I first came to Congress back in 1999 
and H.R. 10 was being considered, the big push was leave the 
regulation of insurance to the States.
    Now, if you want to leave the regulation of insurance to 
the States, why then do you want to push this other piece to 
uniformity and reciprocity across the board? What is the 
advantage of that?
    Mr. Counselman. The advantage is the efficiency, because 
the NARAB proposal would still allow the States to regulate 
insurance and to regulate agents.
    Mrs. Jones. So it is more efficient for you to be uniform 
with licensing, but it is more efficient for each State to be 
the regulator?
    Mr. Counselman. Just on the licensing issue alone, it is 
more efficient to get a license once; and so, just on that 
basic principle, we want there to be uniformity of licensing.
    Mrs. Jones. If you know, are licensing fees used to fund 
insurance regulation within the States?
    Mr. Counselman. They are a part of funding, but the major 
funding for insurance regulation comes from premium tax that is 
collected by the States, which, on average, is about 3 percent 
of premium. So licensing fees are an additional source of 
income, but they are not the major source of income, to my 
    Mrs. Jones. Are you able to tell me what percentage of the 
funds that fund a licensing regulation in the State come from 
licensing fees?
    Mr. Counselman. I wouldn't know the answer to that.
    Mr. Kirven. It is not that significant, Congresswoman.
    Mrs. Jones. I don't know whether it is, and I am trying to 
get educated on it.
    Mr. Smith. I am sure that Mr. Counselman and I would both 
be happy to pay a fee if we could go ahead and apply for a 
license in Florida. I am in Indiana. If I could use my status 
in Indiana to apply at the same time in Florida, I would be 
happy to pay a fee if that is what it took, rather than go 
through a whole separate licensing process and pay a fee that 
    Mrs. Jones. So, in other words, you would pay 50 fees if 
you could get licensed once?
    Mr. Smith. If that is what we are required. We are doing 
that now. So if it was found that that money was really, 
indeed--I am not advocating agents want to spend any more money 
than we have to--but. if it was found that some of that money 
was needed to help regulate the States, I am sure there would 
be some cost. We would be happy to pay a nominal fee, as long 
as we could get around or have a uniform license that we could 
use for every jurisdiction.
    Mrs. Jones. Well, there is some administrative cost to 
regulating an industry, and so what I am trying to find out 
from the three of you, if you can educate me--maybe you can't. 
Then I will ask someone else. Is part of that processing, or 
part of this--I don't know what word I want to use--this hurdle 
that you must leap responsible or is it attributed to the fact 
that the States say I need something to cover the cost of 
regulating your industry?
    Mr. Counselman. From my experience of sending in the 
licensing fees and the process that is involved in it, the 
application process and the issuing of the license, I am not 
advocating increasing fees, but I would doubt that the fee----
    Mrs. Jones. So the record is clear. Right?
    Mr. Counselman. I would doubt that the fee that is 
collected would actually cover the cost of issuing the license, 
because there is so much paper that has to be reviewed before 
the license can be issued. I would be doubtful if the revenue 
actually covers the expense for an individual State to handle 
that service.
    Mr. Smith. I am not intimate with all the monetary details 
of the State of Indiana, but I do know that in the State of 
Indiana premium taxes actually go into our general fund, and 
all of the premium tax is not used just for the funding of the 
insurance department. Several of the funds are sent to other 
departments in the State.
    Mrs. Jones. Mr. Chairman, if you would just allow Mr. 
Kirven to respond, I am finished with my question.
    Mr. Kirven. Congresswoman, I was trying to do my--we have 
about 80,000 agents registered in the State of Colorado, and I 
believe our fee is about 36 bucks, which I can't do in my head. 
But I can do $30. So it would be about $240,000 in--is that 
right--fees, and I think our contract to process licenses cost 
$300,000. So it is not a revenue generator for us.
    Chairman Baker. Let me point out, too, if I may--if I am 
understanding the process correctly, if you file once in 
Indiana, pay your fees in Indiana, then a database is created 
in Indiana that other States can access to verify before you 
are allowed to enter into that market. So you are really 
talking about 50 State repositories where you are principally 
licensed, and other States have access via the Internet, I 
presume, to that database. Is that what we are envisioning?
    Mr. Kirven. We already have a producer database which has 
all but about 300,000 of the agents licensed in it already 
today. So we do have that database; and, yes, it would be 
accessible for showing that you are licensed in your 
domiciliary State.
    Chairman Baker. So in a practical matter, just following up 
on Mrs. Jones' line, we would not necessarily be increasing 
costs. We may, in fact, be reducing it with the elimination of 
all of the documents that are now shipped back and forth?
    Mr. Kirven. Hopefully the net result would be less expense, 
no more documents; and, for example, we would save money on 
background checks, too. We could just do it once, and it would 
apply to 50 States.
    Chairman Baker. Terrific.
    Mrs. Jones. Mr. Chairman, if I could just follow up.
    Chairman Baker. Yes.
    Mrs. Jones. What I was trying to determine was, when you 
have a regulator, the cost of regulation, be it investigation, 
be it whatever the heck it is; and I was just trying to see if 
those dollars that were generated by the application fed into 
that process. Thank you very much.
    Chairman Baker. No. I understand. In my own State's case, I 
am sure the licensure fee has no correlation to the enforcement 
side of the business.
    Congressman Miller.
    Mr. Miller. Thank you, Mr. Chairman.
    I used to be in the State legislature on the insurance 
committee, and it always struck me as interesting that the 
fingerprinting was necessary for licensing, and they figured it 
should be required; yet, voter registration cards were 
punitive. Good luck on your legislation at the State. I don't 
know how you are doing, but it should be an interesting 
    I have a couple different numbers that I am finding. One 
brings the total to 20 States that represent 20 percent of the 
total premiums written in the United States. Yet I understand 
that there may be discrepancies between our list and the list 
developed by others. Is there some States that have enacted 
licensing reform that the Council does not believe comply with 
NARAB reciprocity provisions? And the other list says 17 States 
have passed such laws, representing about 16 percent of the 
mark. Is that a fair statement? Seventeen States?
    Mr. Counselman. I believe you have quoted--when you 
mentioned the Council, you certainly were quoting my testimony. 
At any different point in time--and that might be the reason 
for the differences among our testimony, because these bills 
are being passed in the last few days. The numbers change 
    Mr. Miller. Yes. You know, I have quite a few friends in 
the insurance industry and, you know, you talk to them about 
the requirements of different States and trying to provide the 
same service from State to State, how burdensome that is and 
how complex and in many cases confusing, and unless you are a 
very, very large company, it makes it very difficult for you 
and it makes it very difficult for smaller companies going into 
    And I am kind of changing my mind. In the past, I always 
believed that it should be an absolute State issue dealing with 
insurance issues and issues associated with a State, but I am 
beginning to wonder if there is a need for an optional Federal 
charter for insurance companies, similar to depository 
institutions. What is your opinion on that, just as a sidebar?
    Mr. Counselman. There may well be a place for an optional 
Federal charter for certain types of insurance or for certain 
categories of insurance. For example, one program that I 
represent has only 100 insureds. They are located through the 
country, but the policy form has to be filed in 50 States, 
because those 100 insureds are in different jurisdictions. So 
that would be an example of where it would be very useful to 
have a Federal charter.
    Mr. Miller. Instead of an adviser group of individuals who 
are willing to give their time to discuss and debate these 
issues, and it is something I think needs to be debated in the 
near future.
    I don't have an answer. I don't think anybody does, but 
there seems to be a growing need for some form of regulation 
that is consistent, where you know what you are doing and 
without having to deal with--you dealt in California. I mean, 
your oversight changes weekly, depending on what bill goes 
before a committee. It is almost impossible to keep up with.
    But in the statement of intent, the 49 State insurance 
commissioners at the NAIC national meeting, it reads, quote, we 
have empowered the NAIC's non-profit affiliate insurance 
regulatory information network to develop recommendations for a 
streamlined national producers licensing process that will 
reduce the cost--I love this--reduce the cost and complexity of 
regulatory compliance related to the current multistate 
process, end quote.
    However, under NARAB's provision for required reciprocity, 
States are still allowed to have countersignature requirements; 
and does this provision defeat your effort to reduce the costs 
and complexity of regulatory compliance related to the current 
multistate process?
    Mr. Counselman. It was a compromise. When the bill was 
enacted, that countersignature was specifically deleted in 
order to get the appropriate support. We really do believe that 
countersignature should be one of those uniform issues and 
should be addressed.
    Mr. Miller. And if it is not addressed, you are still 
dealing with a complicated process you had to go through 
otherwise. So that basic intent really did you no good.
    Mr. Counselman. Well, at least it is a limited--the 
countersignature issue is a limited number of States, and the 
licensing issue obviously affects all 50 States, but 
countersignature--differing countersignature requirements are 
really focused on--I believe it is about five States.
    Mr. Miller. So, basically, if we had an optional Federal 
charter, many of these issues would dissolve with that, if it 
could be worked out based on the different insurance entities 
that are involved in it?
    Mr. Counselman. It may or may not be resolved, because most 
agents would probably still be selling insurance through 
companies that are licensed and regulated in the individual 
States and perhaps other forms of insurance or specific 
programs that would be under a Federal charter. So, in all 
probability, agents and brokers would still have--they might 
then have two licenses instead of 50 or----
    Mr. Miller. So it would be much more simplistic?
    Mr. Counselman. It would be simplistic.
    Mr. Miller. Thank you, Mr. Chairman.
    Chairman Baker. Thank you, Mr. Miller.
    Just for information, we distributed to date all Members a 
tentative committee agenda, and one of the possible issues for 
fall consideration is examination of the national charter 
question. And so people don't get excited, that doesn't mean we 
are introducing legislation. We are just examining.
    Mr. Miller. One of the States is on that charter concept?
    Chairman Baker. Yes.
    Mr. Miller. I applaud you for that, because I believe 
things have changed dramatically in recent years, and the 
requirements that many States impose on insurance companies 
tend to be punitive based on the mandates of 50 separate States 
and trying to meet those mandates. I think there is far too 
much confusion. I applaud you.
    Chairman Baker. Well, it is merely a discussion to make 
inquiry that Chairman Oxley has indicated that that is an area 
of interest for his review, and so sometime this fall--it is 
the committee agenda as such. We are creating enough trouble 
between now--that we can't get to it till then.
    Mr. Miller. Thank you, Mr. Chairman.
    Chairman Baker. Thank you.
    Mr. Smith. If I can make a quick comment in that regard, I 
would appreciate it.
    We have been opposed to Federal charters, simply from the 
standpoint that we don't want just another level of bureaucracy 
added to our industry. But I do applaud the fact, though, that 
there is room for discussion. We like the idea of potentially 
maybe some national charters; and we, too, would applaud you 
for having discussions in that regard.
    Mr. Miller. If approached properly, similar to banks, State 
savings and loans, it works very well; and I myself--and I am 
sure the Chairman and Mr. Oxley, have no interest in creating a 
bureaucratic nightmare for the industry to go through. It only, 
from my perspective, could happen if some reasonable conclusion 
and agreement could be reached within the industry that was 
beneficial, that would simplify the process everybody has to go 
by. Where you are asking for that today, we are saying maybe we 
can do that in a broader fashion.
    Chairman Baker. And I want to reiterate, I am not 
advertising--as you are not advertising for new fees, I am not 
advertising for a new Federal regulator. Just to make the 
record clear.
    Mr. Meeks.
    Mr. Meeks. Thank you, Mr. Chairman.
    And you know, I, like my colleague, Mrs. Jones, am trying 
to learn. I know that, as a practicing attorney, I wish that I 
could go to--take one--get one license and practice in any 
State in the Union, but I can't, and there is different 
competing interests that the States have to determine how many 
lawyers are practicing in the State and to limit that number.
    But let me ask this question. Here is my real question. I 
know in the Gramm-Leach-Bliley bill they set a minimum goal in 
which to achieve the reciprocity in licensing reform efforts. 
If those minimum goals are met, why wouldn't it just then 
fizzle out?
    Mr. Kirven. Congressman, we recognized early on that those 
minimum goals are just simply that, that that is not really 
true reform and that we need to have nationwide uniformity 
amongst the States. Having 29 States simply is not an 
acceptable--a minimum for us. We are not going to quit. We 
really have--we are using this as impetus to push for total 
uniformity, because that is really what today's markets and the 
globalization of the industry requires.
    Mr. Meeks. Well, is there anything else that you think that 
we should be doing in Congress to keep pushing reform?
    Mr. Kirven. As I stated earlier, I think that we appreciate 
the opportunity to see how much progress and see if we can get 
that uniformity. If there are a few holdout States or somebody 
that won't give up countersignatures, maybe some form of pre-
emption would then be necessary to let us push our goal of 100 
percent compliance.
    Mr. Meeks. Is there--and I missed most of the testimony, 
but do you see any compelling reason by any of the States not 
to want to have a reciprocity on reform?
    Mr. Kirven. Over time, States have developed unique 
features that they think are very essential; and we talked 
earlier about California and fingerprints and checking the 
criminal database, and only a minority of States do that, check 
fingerprints, but they are very married to that idea.
    That is one example of where a State has something that 
they are somewhat married to and reluctant to give up, and we 
are trying to address those issues going forward of a way to do 
that without necessarily requiring every State in the Union to 
do that, although it may or may not be a bad thing. Some people 
don't like the idea. We are working on letting those States 
still be able to do that but still having a uniform process.
    Mr. Meeks. Thank you, Mr. Chairman.
    Chairman Baker. Thank you, Mr. Meeks.
    Each State is different. Louisiana has had reason to 
fingerprint its past four commissioners.
    Mr. Weldon.
    Mr. Weldon. Thank you, Mr. Chairman.
    Mr. Smith, in your written testimony, you note that some 
insurance departments have been hesitant to introduce and 
support the Producer Licensing Model Act. Could you please tell 
us which insurance departments you are referring to and why you 
think this is occurring?
    Mr. Smith. We would be happy to get you that list.
    I think why it is occurring is because the issues that we 
have been talking about here, several States think that they 
have certain distinctive things about their particular State 
that require them to use fingerprints or have a 
countersignature or whatever those requirements are; and, 
therefore, they have been reluctant to get on board with the 
Model Act.
    I think some of the States we have talked about--obviously, 
Florida is a State we have worked with. California, Texas has 
had some problems. I mean, it is relatively common what those 
States are.
    Mr. Weldon. I am from Florida, you know, so be careful what 
you say.
    Mr. Smith. Florida is a great State. I absolutely love 
Florida. And, as I say, my largest client is there. So we have 
worked very closely with a lot of the people in Florida, and 
our association works very hard with----
    Mr. Weldon. I was just teasing you about that.
    Mr. Smith. That is OK. It is OK. I don't change. They still 
have some questions--they question--a lot of the States--a 
lot--some of the States still question the need for this act, 
the uniform piece, and so that is what we are fighting in a few 
of the jurisdictions.
    Mr. Weldon. Is some of the dynamics of what has been going 
on some response to Gramm-Leach-Bliley, this section there of 
just market issues? Are the small States that are coming into 
compliance interested in getting into the big State markets? 
Are the big State markets reluctant to get into there because 
they see an opportunity for business going elsewhere? Just 
protecting the home turf, in other words.
    Mr. Smith. I think that is a good question. I think there 
is some protection, I feel. I think a lot of it is timing. I 
think some of the big States have had budgetary items. I think 
this has been a secondary or back-burner issue for them. I 
don't see that any small State wants to get into big State 
    We have clients in Rochester, Indiana, a town of 7,000 
people, that literally have plants in several States across the 
country. So they are used to dealing with me; and if they have 
a plant in New Jersey or Montana or someplace else, they would 
rather have me take care of that on a rather simplistic matter 
than deal with some other agent some place in one of those 
    So that is why uniformity is important. I really think it 
is an economic issue more than anything right now.
    Mr. Weldon. But if I understand all three of you correctly, 
the level of uniformity that has occurred so far would have 
never occurred without this provision and that if we are going 
to get all 50 States on board it is going to stay further 
action on the part of Congress, on the part of Federal 
    Mr. Smith. I think one of James Bond movies was ``Never Say 
Never,'' but I think, yes, you may very well be right. This, 
the Gramm-Leach, provided the impetus for these reforms to 
start taking place.
    Will they be complete without more impetus? I think that is 
a question that we won't fully know the answer to until 
sometime next year as we get closer to the deadline. But you 
may very well be right. We may need some more preemption from 
this group to make sure we have reciprocity and uniformity.
    Mr. Weldon. Mr. Kirven, Mr. Counselman, do you want to 
comment on that?
    Mr. Counselman. Congressman, I think there are other issues 
that do come up that effect the passage of this legislation on 
a State-wide basis, and I think that because it is not always 
just licensing that is being examined, but it is other 
insurance issues that some States and some State legislatures 
feel that they want to have absolute control over without 
giving up any semblance of control.
    Our point is that this isn't a control issue. This is a 
licensing efficiency issue. So we are trying to hammer home the 
thought that this is all about paperwork. This is not about 
regulation. But those other issues do come up, relating to a 
State giving up some ability to regulate insurance within its 
    Mr. Weldon. I believe my time has expired. Thank you, Mr. 
    Mr. Baker. Thank you, Mr. Weldon.
    Mr. Lucas. No questions.
    Mrs. Kelly, did you have a wind-up comment?
    Mrs. Kelly. Thanks, Mr. Chairman.
    I just have a message for you, Mr. Kirven. Let me ask you 
to take a message back of one word to the NAIC. That word is 
``uniformity.'' If you folks aren't able to do that and help us 
realize this goal, then I am sure that we are willing to ensure 
that you do.
    Thank you very much, Mr. Chairman.
    Mr. Baker. Thank you Mrs. Kelly.
    Gentleman, I do appreciate your courtesy and participation. 
Obviously, this is the first hearing on this subject within 
this subcommittee's responsibility. For the sake of keeping 
channels of communication open, we will proceed with a series 
of inquiries relating to the NARAB as well as the national 
charter matter. I feel it our obligation to prepare for next 
November should market progress not be where we all would like 
it to be. Then we certainly do not want, after having created 
the standard, to fail to react to the responsibility as 
outlined in Gramm-Leach-Bliley.
    To that end, the respective organizations should know that 
Chairman Oxley and this subcommittee have significant interest 
in the matter. We believe it good public policy, ultimately 
good for the consumers we all serve; and that to that end we 
can work cooperatively together toward a system that makes more 
market sense and delivers better products to all the folks who 
rely on you.
    So I thank you for your courtesies, and we look forward to 
working with you as the months proceed. Thank you.
    Our hearing stands adjourned.
    [Whereupon, at 3:34 p.m., the hearing was adjourned.]

                            A P P E N D I X

                              May 16, 2001