Connecticut Gov. John G. Rowland signed legislation Tuesday allowing state-chartered banks to sell insurance.
Gerald M. Noonan, president of the Connecticut Bankers Association, praised the law as "honest regulation" that treats banks fairly. "We think its one of the better laws on bank insurance sales."
The law requires banks and their employees selling insurance to be licensed by the state insurance department. Banks offering insurance in connection with a pending loan must disclose that policies may be bought from another vendor. Also, institutions would be prohibited from using information in loan documents to market insurance products.
Separately, New York lawmakers are expected to approve similar legislation within two weeks. Bank and insurance trade groups have signed off on so-called "wild card legislation" that would give state banks the same powers as national banks.
Under the deal, insurance activities of state banks would be regulated by the New York State Insurance Department. However, state bank regulators would be allowed to exempt institutions from any insurance law that has been preempted for national banks.