NU Online News Service, May 24, 10:15 a.m. – The Financial Institutions Insurance Association, Corte Madera, Calif., has clashed with the National Association of Insurance Commissioners, Kansas City, Mo., over the NAIC’s opposition to recent federal moves to preempt state laws regulating bank sales of insurance.
The federal Gramm-Leach-Bliley Financial Services Modernization Act of 1999 set limits on states’ ability to regulate insurance sales by banks and other financial institutions. Earlier this year, the NAIC decided to file an amicus brief to support a West Virginia suit in U.S. District Court in Washington against the Office of the Controller of the Currency after the OCC moved to block that state’s efforts to regulate bank insurance sales.
“NAIC’s participation in lawsuits opposing the preemption of state laws inhibiting the rights of financial institutions to fully participate in the business of insurance [is] contrary to FIIA’s members’ interests,” FIAA says. “Further, NAIC’s actions raise the question of its ability to continue its GLBA duties while openly challenging the nation’s banking regulators’ established federal authority.”
Richard Starr, chairman of FIIA, says the NAIC-OCC conflict “cannot be passed off as a ?cordial, professional disagreement’ over OCC’s wording of preemptive standards. Free-market enterprise principles are at stake, and it appears the NAIC has sided with protectionism.”
Congress intended banks to sell insurance when it passed GLB, Starr states, “and that fact should not be lost in the clutter and background noise intended to obfuscate and to garner votes in the mid-term elections.”