Agents May Skip the Fight On Insurance

WASHINGTON -- A professional organization for insurance agents has decided not to oppose federal legislation to expand bank's insurance powers -- as long as states get to call the shots.

Daniel J. Blum, president-elect of the National Association of Professional Insurance Agents, disclosed its stance in a speech this week to the Association of Banks in Insurance.

But he raised doubts that banks will reap the financial rewards they expect from the insurance business. "Many insurance companies are pulling out of markets because they can't make a profit there," he said.

Income from Annuities

Other panelists at the meeting said banks are in the insurance business to stay.

Andrew H. Tasker, president of Tasker Financial Marketing Inc., Cleveland, noted that three-quarters of U.S. banks offer annuities. He said banks will derive 1% to 5% of 1991 net profit from insurance sales.

Carl Copp, vice president of Conning & Co., a Hartford, Conn., investment firm specializing in the insurance business, pointed to the profits and positive experiences European banks have had selling insurance.

Mr. Blum said his group -- which represents 180,000 independent agents -- is watching to see where Congress draws the line between state and federal jurisdiction over insurance powers.

|Stealth Attack' Feared

The administration's banking bill would give national banks the same insurance powers as local banks operating in each state, he noted. That would expand bank insurance powers in some states and eliminate them in others. But the measure would close loopholes that let banks sell insurance nationally, regardless of state law, he said.

"If Citicorp wants to sell insurance over state lines, it should get explicit authorization from each state," Mr. Blum said. "Anything short of this would be an unfair |stealth' attack."

Mr. Blum expressed concern that as a condition of financing banks might make borrowers buy insurance from them for houses and other purchases. Consumers could be misled to believe insurance bought through banks was backed by federal deposit insurance, he said.

"A bank insurance operation that relies on the banks' exclusive advantages is a field-tilter."

Mr. Blum recommended that banks physically separate their insurance and loan departments, sell insurance only after a loan is complete, and withhold from their insurance agents confidential information obtained by loan officers.

Ms. Kalen Hockstader writes for the Medill News Service.

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