OCC Preempts Parts Of West Virginia Bank Insurance Sales Law

However, the OCC said three provisions of the West Virginia law should not be preempted. These are:

1. A prohibition against requiring or implying the purchase of an insurance product from a financial institution is a condition of a loan.

2. A prohibition on a financial institution offering an insurance product in combination with other products unless all the products are available separately.

3. A requirement that the extension of a loan and the sale of insurance be completed independently and through separate documents.

David Winston, vice president of federal affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va., said agents are reviewing whether to challenge the OCCs ruling in court.

In effect, he says, the OCC has preempted provisions that fall outside the safe harbors in GLB. However, he says, agents believe the OCC does not have the authority to preempt state laws. Only courts can do that, he says.

Moreover, NAIFA believes the OCC evaluated the law under the standard of imposing “additional and unnecessary expenses,” which, he says, is the wrong standard.

All the agent groups, he says, will be meeting shortly to discuss their next move.

Reproduced from National Underwriter Life & Health/Financial Services Edition, October 8, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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