U.S. GOVERNMENT PRINTING OFFICE

72–560 PS WASHINGTON : 2001

NARAB AND BEYOND

HEARING

BEFORE THE

SUBCOMMITTEE ON

CAPITAL MARKETS, INSURANCE, AND

GOVERNMENT SPONSORED ENTERPRISES

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

(

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2550

Mail: Stop SSOP, Washington DC 20402–0001
(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa

MARGE ROUKEMA, New Jersey, Vice Chair

DOUG BEREUTER, Nebraska

RICHARD H. BAKER, Louisiana

SPENCER BACHUS, Alabama

MICHAEL N. CASTLE, Delaware

PETER T. KING, New York

EDWARD R. ROYCE, California

FRANK D. LUCAS, Oklahoma

ROBERT W. NEY, Ohio

BOB BARR, Georgia

SUE W. KELLY, New York

RON PAUL, Texas

PAUL E. GILLMOR, Ohio

CHRISTOPHER COX, California

DAVE WELDON, Florida

JIM RYUN, Kansas

BOB RILEY, Alabama

STEVEN C. LATOURETTE, Ohio

DONALD A. MANZULLO, Illinois

WALTER B. JONES, North Carolina

DOUG OSE, California

JUDY BIGGERT, Illinois

MARK GREEN, Wisconsin

PATRICK J. TOOMEY, Pennsylvania

CHRISTOPHER SHAYS, Connecticut

JOHN B. SHADEGG, Arizona

VITO FOSELLA, New York

GARY G. MILLER, California

ERIC CANTOR, Virginia

FELIX J. GRUCCI, JR., New York

MELISSA A. HART, Pennsylvania

SHELLEY MOORE CAPITO, West Virginia

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

PATRICK J. TIBERI, Ohio

JOHN J. LAFALCE, New York

BARNEY FRANK, Massachusetts

PAUL E. KANJORSKI, Pennsylvania

MAXINE WATERS, California

CAROLYN B. MALONEY, New York

LUIS V. GUTIERREZ, Illinois

NYDIA M. VELA ́ ZQUEZ, New York

MELVIN L. WATT, North Carolina

GARY L. ACKERMAN, New York

KEN BENTSEN, Texas

JAMES H. MALONEY, Connecticut

DARLENE HOOLEY, Oregon

JULIA CARSON, Indiana

BRAD SHERMAN, California

MAX SANDLIN, Texas

GREGORY W. MEEKS, New York

BARBARA LEE, California

FRANK MASCARA, Pennsylvania

JAY INSLEE, Washington

JANICE D. SCHAKOWSKY, Illinois

DENNIS MOORE, Kansas

CHARLES A. GONZALEZ, Texas

STEPHANIE TUBBS JONES, Ohio

MICHAEL E. CAPUANO, Massachusetts

HAROLD E. FORD, JR., Tennessee

RUBE ́ N HINOJOSA, Texas

KEN LUCAS, Kentucky

RONNIE SHOWS, Mississippi

JOSEPH CROWLEY, New York

WILLIAM LACY CLAY, Missiouri

STEVE ISRAEL, New York

MIKE ROSS, Arizona

BERNARD SANDERS, Vermont

Terry Haines, Chief Counsel and Staff Director
(III)

SUBCOMMITTEE ON CAPITAL MARKETS, INSURANCE, AND

GOVERNMENT SPONSORED ENTERPRISES

RICHARD H. BAKER, Louisiana, Chairman

ROBERT W. NEY, Ohio, Vice Chairman

CHRISTOPHER SHAYS, Connecticut

CHRISTOPHER COX, California

PAUL E. GILLMOR, Ohio

RON PAUL, Texas

SPENCER BACHUS, Alabama

MICHAEL N. CASTLE, Delaware

EDWARD R. ROYCE, California

FRANK D. LUCAS, Oklahoma

BOB BARR, Georgia

WALTER B. JONES, North Carolina

STEVEN C. LATOURETTE, Ohio

JOHN B. SHADEGG, Arizona

DAVE WELDON, Florida

JIM RYUN, Kansas

BOB RILEY, Alabama

VITO FOSSELLA, New York

JUDY BIGGERT, Illinois

GARY G. MILLER, California

DOUG OSE, California

PATRICK J. TOOMEY, Pennsylvania

MIKE FERGUSON, New Jersey

MELISSA A. HART, Pennsylvania

MIKE ROGERS, Michigan

PAUL E. KANJORSKI, Pennsylvania

GARY L. ACKERMAN, New York

NYDIA M. VELA ́ ZQUEZ, New York

KEN BENTSEN, Texas

MAX SANDLIN, Texas

JAMES H. MALONEY, Connecticut

DARLENE HOOLEY, Oregon

FRANK MASCARA, Pennsylvania

STEPHANIE TUBBS JONES, Ohio

MICHAEL E. CAPUANO, Massachusetts

BRAD SHERMAN, California

GREGORY W. MEEKS, New York

JAY INSLEE, Washington

DENNIS MOORE, Kansas

CHARLES A. GONZALEZ, Texas

HAROLD E. FORD, JR., Tennessee

RUBE ́ N HINOJOSA, Texas

KEN LUCAS, Kentucky

RONNIE SHOWS, Mississippi

JOSEPH CROWLEY, New York

STEVE ISRAEL, New York

MIKE ROSS, Arizona

(V)

C O N T E N T S

Page

Hearing held on:

May 16, 2001 ..................................................................................................... 1

Appendix:

May 16, 2001 ..................................................................................................... 29

WITNESSES

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

APPENDIX

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

(1)

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 GrammLeach-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
2

beyond the reported numbers. But certainly, the subcommittee will

move very slowly in its actions and carefully listen to all affected

parties.

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 nonresident 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 NARAB.

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 in-
3

surance 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.

STATEMENT OF HON. SUE W. KELLY, A REPRESENTATIVE IN

CONGRESS 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
4

broker has to get upward of 100 insurance licenses in order to market national insurance programs.

More seriously, those agents encounter numerous obstacles that

have been erected in States to protect in-State agents from out-ofState 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
5

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.
6

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
7

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 questions?

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.

STATEMENT OF HON. WILLIAM J. KIRVEN 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; ON 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 bit.

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 uti-
8

lizing 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-LeachBliley. 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 nonprofit 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 Act.

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
9

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 covered.

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 answers.

[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.

STATEMENT OF ALBERT R. COUNSELMAN, PRESIDENT, RIGGS,

COUNSELMAN, MICHAELS & DOWNES, BALTIMORE, MD;

PAST CHAIRMAN, COUNCIL OF INSURANCE AGENTS AND

BROKERS

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.
10

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.
11

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 States.

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 issue.

[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.

STATEMENT OF RONALD A. SMITH, PRESIDENT, SMITH, SAWYER & SMITH, INC., ROCHESTER, IN; STATE GOVERNMENT

AFFAIRS CHAIRMAN AND PAST PRESIDENT, INDEPENDENT

INSURANCE AGENTS OF AMERICA; ON BEHALF OF THE IIAA,

NATIONAL ASSOCIATION OF INSURANCE AND FINANCIAL

ADVISORS, AND THE NATIONAL ASSOCIATION OF PROFESSIONAL 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 Agents.

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
12

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 GrammLeach. 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.
13

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 GrammLeach-Bliley and whether or not there was clear enough direction

in the language of the Act to understand the goal.

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 uniformity.

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
14

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 consistent.

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 deadline?

Mr. KIRVEN. Yes. I am talking about 29 States’ reciprocity. We

will exceed that goal, but our real goal is 50 States for uniformity.

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 act?

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 uniformity?

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
15

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 for?

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 legislatures.

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 protectionist.

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

one?
16

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 uniform.

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
17

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 preemption 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 people.

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,
18

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 State.

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 issue.

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?
19

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 them.

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.
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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

don’t—— 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 knowledge.

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
21

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 way.

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
22

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 process.

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 daily.

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 States.

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 in-
23

surance 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?
24

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
25

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.
26

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 marketing.

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 jurisdictions.

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 Government.

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.
27

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 jurisdiction.

Mr. WELDON. I believe my time has expired. Thank you, Mr.

Chairman.

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.]

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