Agent Groups May Challenge OCC Ruling On West Virginia Law

Agent Groups May Challenge OCC Ruling On West Virginia Law

By Steven Brostoff

Washington

Insurance agents groups are evaluating whether to file a legal challenge against a determination by the Office of the Comptroller of the Currency preempting parts of a West Virginia law regulating bank insurance activities.

Maria Berthoud, senior vice president of federal affairs for the Alexandria, Va.-based Independent Insurance Agents of America, says IIAA is committed to trying to overturn the OCCs determination and is seeking to build a coalition with other agent groups to file a legal challenge.

She notes that, in effect, the OCCs decision would affect bank insurance laws in 19 states that have provisions similar to those in West Virginia that the OCC said should be preempted.

David Winston, vice president of government affairs for the Falls Church, Va.-based National Association of Insurance and Financial Advisors, says NAIFA is considering litigation.

NAIFAs executive committee is currently evaluating all the pros and cons of pursuing litigation and will make a decision, Winston says.

Meanwhile, bank insurance representatives praised the OCCs determination.

Beth L. Climo, executive director of the Washington-based American Bankers Insurance Association, calls the action “a positive development for banks and consumers of insurance.

“It ensures that banks can offer insurance products to consumers without improper interference or discrimination by a state,” she says. “It also provides a useful roadmap for state regulation of bank insurance activities.”

Specifically, the OCC issued an opinion on Oct. 3 that four provisions of West Virginias Insurance Sales Consumer Protection Act either “prevent or significantly interfere” with bank insurance activities and thus should be preempted under the Gramm-Leach-Bliley Financial Modernization Act. (See NU, Oct. 8.)