Insurance: Ruling and Legislation Spur Banks in Connecticut

Banks are gaining ground in their quest to sell insurance in a state that many insurance companies call home.

Connecticut's state legislature last week passed a bill that would let state-chartered banks sell insurance to their customers.

One week earlier, a federal court in Connecticut gave federally chartered banks in the state the go-ahead to sell insurance directly to their customers.

The state legislation now awaits the signature of Gov. John G. Rowland. Once signed, the law would give Connecticut's state-chartered banks the same authority to sell insurance that federally chartered banks have under the U.S. District Court of Connecticut's ruling.

U.S. Judge Janet Bond Arterton said on May 23 that Fleet Financial Corp., Boston, can sell insurance in Connecticut through towns with fewer than 5,000 people. The ruling came in a case originally filed by Shawmut Bank in 1994 and inherited by Fleet in 1995 when it bought Shawmut.

Now that Fleet has the permission it sought, the bank is ramping up its Connecticut sales efforts to high speed. After the bank completes its state insurance license requirements, it will begin marketing term life, disability, and long-term care insurance, according to an announcement.

Marketing materials will be distributed through its Connecticut branches, via statement-stuffers and on its site on the World Wide Web.

The bank plans to offer Connecticut customers homeowners, auto, and small-business commercial insurance. Fleet already sells insurance throughout New England, New York, New Jersey, and Florida.

"The purpose behind our efforts to make insurance available for our customers is to give them more complete solutions to their financial needs," said Robert E. Evans, managing director in charge of insurance at Fleet, in a prepared statement.

Fleet's life insurance menu includes products from Zurich-Kemper, Travelers, CNA, and John Hancock. Its long-term care carriers are CNA and Travelers, and disability insurance in available from Massachusetts Casualty and the Hartford.

Other Connecticut financial institutions are also taking advantage of the loosened restrictions.

Peoples Bank, a thrift based in Bridgeport, Conn., will expand its insurance menu once the state legislation becomes law, said Caryl Brown, vice president of life insurance.

The thrift has sold Savings Bank Life Insurance since 1942 and now sells variable and fixed annuities. It plans to add more insurance products to its product menu.

Peoples' challenges are different from those facing Fleet, Ms. Brown said. Fleet already sells many insurance products in other states and is expanding its operations geographically. Peoples has to decide what it will sell, as well as where and how it will sell insurance products.

"Now that we have a lot of potential opportunities, we have a lot of work ahead of us," Ms. Brown said.

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