The Comptroller of the Currency is working on a set of principles that would govern the way banks could sell insurance.
The so-called best practices agreement would include a list of disclosures banks must make before selling a policy, and it would remind banks that they cannot tie loan approvals to insurance purchases, said Julie Williams, chief counsel at the Comptroller's office.
"We want to make sure consumers understand the nature of their investment," Ms. Williams said.
The best practices agreement was one of several issues debated during a Tuesday meeting between officials at the Comptroller's office and representatives of 15 state insurance departments.
Ms. Williams said the discussion revealed that the existing principles covering bank securities sales are not broad enough to encompass insurance.
Briget Polichene, general counsel to the Indiana Insurance Department, said a best practices agreement could resolve a sticky legal dispute over state regulation of national bank insurance sales.
The agreement could force banks to follow most state insurance laws, without requiring the Comptroller's office to concede that state law applies to national banks.
"We'd end up at the same place as if the banks were licensed," she said. "So, the states would be very supportive."
The regulators also discussed how the wide variety of state insurance laws would apply to national banks, and what role states would play in enforcing those laws, Ms. Williams said.
She said no consensus was reached during the hourlong discussion at the Comptroller's offices here.
"It was a good, constructive meeting," Ms. Williams said.
"It went very well," agreed Arkansas Insurance Commissioner Lee Douglass. "We identified some preliminary issues that the Comptroller's office and our people could work on to resolve."
No date has been set for a second meeting.
The regulator conference occurred the day after arguments before the Supreme Court in the Barnett Banks case, in which a decision is sought on whether states can block national bank insurance sales.
"There will be a wide variety of national bank insurance sales regardless of the court's decision," Ms. Williams said. "We felt there ought to be a way to work together."
David Roderer, a partner at the Washington law firm of Winston & Strawn, said the Barnett case makes the talks critical.
Congress won't allow banks to sell insurance unsupervised, he said. Unless the banking and insurance regulators concur on a plan to regulate banks, lawmakers will devise their own, he said.