The differing state licensing laws really have been barriers to competition. There's almost no way for agents that operate in all states to be fully compliant with each of the states' laws. The NAIC began work on a model law on agent licensing in 1997. At press time the model had not been adopted but adoption was imminent. The problem with NAIC models is that they are only advisory.
States can add or subtract and when that happens, there's no true reciprocity.
Wood continues that the legislation would preempt only residency barriers and other restrictions that impede the ability to operate on a multistate basis. There is nothing in the legislation that usurps state unfair trade practices. Fraud oversight and market practices would remain under the purview of state regulators. However, when President Clinton signed the legislation, he indicated that he felt this provision was unconstitutional and would be considered only advisory in nature. The often anachronistic state laws on licensing inhibit competition.