# Insurance Modernization, NARAB & Rental Car Insurance

This corner of Title 15 is really about one big question: who regulates insurance when insurance starts colliding with banks, multistate licensing, corporate restructuring, and related financial moder

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- As of: 2026-11-01
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## Facts
- Domain: business
- Category: Insurance Regulation
- Page type: topic
- U.S. Code anchor: none
- Last verified: not recorded

## Article

This corner of Title 15 is really about one big question: **who regulates insurance when insurance starts colliding with banks, multistate licensing, corporate restructuring, and related financial modernization?** Congress's answer was not to federalize ordinary insurance regulation. Instead, it mostly kept **state insurance regulation** in place, while creating a handful of federal guardrails and coordination tools.

That is why this chapter bundles together several topics that look unrelated at first glance. One subchapter says insurance remains **functionally regulated by the states**. Another creates a federal path for **redomestication of certain mutual insurers**. Another establishes the legal framework for **NARAB**, the voluntary multistate producer-licensing association. And a final provision sets a temporary federal presumption for **rental car insurance sales** tied to short-term rentals.

## Current Law (2026)

| Parameter | Value |
|-----------|-------|
| Core chapter | 15 U.S.C. ch. 93 |
| Main baseline | State regulation of insurance remains the default |
| Key federal overlay | Gramm-Leach-Bliley-era rules on bank-insurance interactions, licensing, and preemption |
| Multistate producer piece | NARAB statutory framework in 15 U.S.C. §§ 6751-6764 |
| Mutual insurer restructuring piece | Redomestication rules in 15 U.S.C. §§ 6731-6735 |
| Rental car insurance piece | 15 U.S.C. § 6781 |
| Overall status | Stable insurance-federalism framework rather than a fast-moving federal program |

## Legal Authority

- **15 U.S.C. § 6701** — Operation of State law
- **15 U.S.C. §§ 6711-6717** — State regulation of insurance, including functional regulation, bank-insurance boundaries, dispute resolution, and interagency consultation
- **15 U.S.C. §§ 6731-6735** — Redomestication of mutual insurers
- **15 U.S.C. §§ 6751-6764** — National Association of Registered Agents and Brokers
- **15 U.S.C. § 6781** — Standard of regulation for motor vehicle rentals

## How It Works

The statute's foundational architecture is **functional regulation**: under **15 U.S.C. § 6711**, insurance activities are regulated by the states, with federal law setting certain boundaries where banking and insurance overlap. This framework emerged from the Gramm-Leach-Bliley era's financial modernization — it prevents states from using insurance regulation to block bank affiliations or frustrate federally authorized activities, while preserving state authority over day-to-day licensing and market conduct. The [Dodd-Frank](dodd-frank-wall-street-reform.md) reforms layered on additional federal provisions, including the [Nonadmitted Insurance & Reinsurance Reform Act](nonadmitted-insurance-reinsurance-reform.md), which addresses surplus lines and reinsurance regulation. NARAB — the **National Association of Registered Agents and Brokers** — is established as an independent nonprofit membership organization whose purpose is to give qualified insurance producers a more efficient, voluntary pathway to access multiple nonresident markets; it is a licensing simplifier, not a federal insurance regulator, and states retain full market-conduct enforcement authority.

Redomestication is the statute's niche corporate tool: the mutual-insurer provisions allow certain insurers to transfer domicile as part of a reorganization into a mutual holding company structure, particularly where the insurer's original state doesn't provide a workable pathway — a corporate-law mechanism, not a consumer-facing rule. The rental-car provision at **15 U.S.C. § 6781** addressed a narrow but economically significant question: whether rental company employees selling collision damage waivers and other short-term coverage at the counter constituted unlicensed insurance agents. The section created a temporary presumption against retroactive licensing or education requirements during a three-year period after enactment while preserving the prospective force of explicit state laws — resolving a dispute that mattered significantly to the economics of the approximately $2–3 billion annual rental car insurance market.

## Key Numbers

- **NARAB membership**: approximately **6,000+ active NARAB members** as of 2025 — insurance producers who use NARAB membership for expedited nonresident licensing access; this is still a fraction of the approximately **1.4 million licensed insurance producers** in the U.S., but the program is growing
- **Pre-NARAB multistate licensing cost**: a producer licensed in all 50 states + D.C. needed 51 separate state licenses; with annual renewal fees ranging from $50-$400/state and separate CE requirements in each, full 50-state producers often spent **$5,000-$15,000/year** just on licensing maintenance — plus staff time to track renewal deadlines across 51 jurisdictions
- **NARAB state participation**: as of 2025, approximately **36+ states** have enacted legislation to participate in NARAB reciprocity, allowing NARAB membership to substitute for individual nonresident license applications; several large states (including California) have been slower to fully integrate
- **Rental car insurance market**: the short-term vehicle rental insurance and waiver market generates approximately **$2-3 billion/year** in consumer purchases; coverage is offered at the counter by approximately **10,000+ U.S. rental locations**; the licensing question that §6781 addressed was whether rental company employees constituted unlicensed insurance sellers — a question that mattered a great deal to the economics of the rental industry
- **Bank insurance distribution**: banks and affiliated entities now account for approximately **15-20% of annuity and life insurance distribution** in the U.S.; the functional-regulation framework in §6711-6717 is what allows bank affiliates to sell these products while remaining subject to state — not federal banking — insurance regulation for those sales

## How It Affects You

**If you're an independent insurance producer working across multiple states**: NARAB is potentially your most relevant federal law. If you hold a resident license in good standing in your home state and pass NARAB's background check and continuing education requirements, membership gives you a single pathway to nonresident market access in participating states — eliminating the need to file individual license applications and track renewal deadlines in each state. For a producer writing in 10 or more states, the savings can exceed **$5,000/year** in fees alone, plus staff time. Whether the switch makes sense depends on your state mix: if your nonresident states are NARAB participants and you're growing your multistate book, NARAB membership is worth evaluating. Contact NARAB directly (narab.org) for current fee schedules and participating-state lists.

**If you work at a bank or credit union selling insurance products**: The functional-regulation boundary in §6711-6717 determines who actually regulates your insurance-selling activity — and the answer is your state insurance department, not your federal banking regulator. That means you (or your institution) need state producer licenses, must comply with state market-conduct rules, and are subject to state consumer-protection standards for your insurance business even though you work for a federally chartered institution. Your institution's compliance team should maintain a clear separation between its banking regulatory compliance (OCC, Federal Reserve, FDIC) and its insurance regulatory compliance (state DOI). If that separation isn't documented, it's a gap that state examiners will flag.

**If you're renting a car and being offered collision damage waiver**: The waiver offered at the rental counter — CDW or LDW, typically **$15-35/day** — is a form of insurance or quasi-insurance product. Section 6781 resolved a post-GLB dispute about whether rental company employees needed individual state insurance licenses to offer these products; today, state law governs whether the offer counts as "selling" insurance requiring a license, and most rental companies hold a limited-lines producer license in states that require it. Whether your credit card's built-in collision coverage makes the rental waiver redundant depends entirely on your card's terms — call your card issuer before you rent, not after a damage claim. This statute is the background legal architecture, not the coverage decision.

**If you work in mutual insurance company corporate restructuring**: The redomestication provisions (§§6731-6735) apply to a narrow but legally significant set of insurers — mutual companies pursuing conversion to a mutual holding company structure when their domestic state doesn't offer a workable path. The process requires coordination between your current state of domicile, the receiving state, policyholder notification and consent procedures, and NAIC coordination. This is highly fact-specific corporate and insurance law, not a routine transaction. If you're advising a mutual insurer on restructuring options, the federal framework is one pathway to evaluate alongside any state-law conversion options your domicile state provides.

## State Variations

State variation is the point here, not an accident:

- States remain the primary insurance regulators
- Producer licensing, market conduct, and insurance-sales rules still vary meaningfully by state
- Federal law in this chapter mostly limits how far states can go in conflicting with certain federally protected structures and affiliations

## Implementing Guidance

- The chapter itself is the main legal framework
- Practical implementation also depends heavily on state insurance departments, NAIC model-law work, federal banking regulators, and related Treasury/FIO insurance policy activity
- For NARAB-related matters, the statute makes clear that state consumer-protection and market-conduct authority remains important even if licensing reciprocity becomes easier

## Pending Legislation (119th Congress)

No major standalone 119th Congress legislation was prominent as of **April 2026** to replace this chapter 93 insurance-federalism framework.

## Recent Developments

**NARAB's operational ramp-up** continued through 2024-2025. The organization has been working through its buildout phase since launching active licensing reciprocity, and progress has been uneven: not all 50 states have enacted participation legislation, interstate data-sharing for license verifications has required sustained NAIC coordination, and some states have resisted participation on grounds that NARAB displaces state licensing revenue and market-conduct oversight leverage. The insurance industry's primary trade groups — NAIFA, IIABA, and NAHU — have continued to lobby state legislatures for participation bills, particularly in large holdout states. Producers interested in NARAB should verify current participating-state lists directly, as the roster has been changing each legislative cycle.

**State market exits are the dominant 2025-2026 insurance story**, but they don't change this chapter's law or structure. State Farm, Allstate, and Farmers exiting or restricting new business in California; the ongoing homeowners insurance crisis in Florida and Louisiana — these are underwriting economics and state rate-regulation disputes, not licensing or banking-affiliation questions. The policy debate around market exits involves reinsurance costs, catastrophe modeling, and state regulatory rate suppression — not the NARAB or GLB framework this chapter addresses. For that story, see [Nonadmitted Insurance & Reinsurance Reform](nonadmitted-insurance-reinsurance-reform.md) and [Federal Insurance Office](federal-insurance-office.md).

**The Federal Insurance Office's affordability work** (not governed by this chapter but in the same insurance-federalism orbit) is the most active federal insurance policy space in 2024-2026. FIO published a homeowners insurance affordability report in 2024 documenting the geographic concentration of market withdrawal in climate-exposed states and advocating for federal data collection authority. Treasury is also engaged in climate-risk insurance discussions through the IAIS international forum. FIO operates within the same structural tension this chapter manages: strong federal interest in insurance policy outcomes, operational regulation still at the state level.

## Sources
- [Insurance Modernization, NARAB & Rental Car Insurance on PolicyRisk](https://policyrisk.com/wiki/insurance-modernization-narab)

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Source: PRIA, https://policyrisk.com/wiki/insurance-modernization-narab (as of 2026-11-01).