IIAA and Banks Reach Insurance Sales Accord

N/Awo days of intense negotiations, the <%=company%> (IIAA) and two large national banks have reached a landmark compromise on insurance sales issues that had previously proven elusive, says IIAA President Bud Wilson.

The compromise was brokered by House Commerce Committee Finance and Hazardous Materials Subcommittee Chairman Mike Oxley (R-OH) during direct negotiations with IIAA officials and representatives of NationsBank and Banc One. The National Association of Life Underwriters helped negotiate the agreement and is supporting the compromise.

The insurance sales accord will establish a safe harbor from preemption by federal bank regulators for all state insurance laws that are similar to the Illinois statute enacted last year. There will also be no unequal deference to a federal bank regulator in legal disputes with state insurance regulators over the applicability of a state law.

"IIAA members applaud the insurance sales compromise reached with NationsBank and Banc One," said Wilson, chairman of the board of Wilson Insurance Agency, Inc., Chula Vista, CA. "IIAA has been working on this issue for decades and it's time we move into the 21st century with agents and banks positioned to compete on a fair and level playing field."

Additionally, the compromise incorporates functional regulation of insurance sales by the states; mandates that all individuals and entities engaged in insurance sales be licensed by the states; and requires national banks entering insurance sales to purchase an existing insurance agency.

"No compromise is perfect and the insurance sales accord is no exception," stresses Wilson, "but IIAA believes it will serve as the all-important impetus to move forward with financial services reform."

IIAA Senior Vice President of Government Affairs, Robert A. Rusbuldt urged the House leadership to move comprehensive financial services modernization to the floor for a vote.

"While I was unsure about the prospects of a financial services bill this time last week, I am now excited about the outlook for the new H.R. 10, which we believe holds great opportunity for both agents and banks," Rusbuldt says.

Rusbuldt says the major compromise involved codifying the Supreme Court's Barnett standard, which stipulates that states cannot prevent or significantly interfere with national bank insurance sales activities, in return for establishing a safe harbor for laws similar to the Illinois bank-insurance regulatory law enacted with the support of that state's banking and insurance industries.

"Without this accord, chances for financial services modernization were bleak at best," said Paul A. Equale, IIAA Executive Vice President of Public Affairs. "Conversely, with this compromise now in hand, the prospects of enacting reform legislation are greatly enhanced. Granted there are other non-insurance issues to be addressed, but it's time for Congress to act on modernization in a bipartisan manner."