OCC Preempts Parts Of Massachusetts Bank Insurance Law
The Office of the Comptroller of the Currency has again determined that a state law regulating bank insurance activities violates the Gramm-Leach-Bliley Act and should be preempted.
This time the target is a Massachusetts law, and the OCC says three provisions in the law wrongly “prevent or significantly interfere” with the ability of banks to sell, solicit or cross-market insurance.
David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, says NAIFA is examining the decision.
It is “disappointing,” he says, that the OCC has yet again interfered with a state law NAIFA and other agent groups believe contains important consumer protections.
The first provision challenged by the OCC prohibits non-licensed personnel from referring a prospective customer to a licensed agent or broker unless the customer initiates the inquiry.
The second provision bars banks from compensating employees who make such a referral.
The third provision prohibits banks from telling loan applicants that insurance products are available from the bank until after the application is approved.
OCC says its action would not preempt any provision of the model Unfair Trade Practices Act developed by the National Association of Insurance Commissioners.
Earlier, the OCC said four provisions of a bank insurance law in West Virginia should be preempted on the same basis as for Massachusetts.
Two property-casualty agent groups, the Independent Insurance Agents of America and the National Association of Professional Insurance Agents, filed a lawsuit against the OCC seeking to overturn its determination.
The lawsuit is now pending in the U.S. District Court for the District of Columbia.
NAIFA is not a party to that lawsuit.
Robert A. Rusbuldt, CEO with IIAA, says his group may again consider litigation.
In other news, the House Committee on Education and the Workforce last week approved legislation aimed at enhancing workers pension rights in the wake of the Enron scandal.