A bill that would allow state-chartered banks to underwrite and sell insurance is awaiting the signature of Hawaii's governor.
Benjamin J. Cayetano has until June 19 to veto the bill, which was passed by Hawaii's legislature three weeks ago.
"The fact that a bill got through was amazing," said Corbett Kalama, vice president, government affairs at First Hawaiian Corp. The state's banks have been fighting a powerful insurance lobby for ten years, he said.
The bill, which comes on the heels of a U.S. Supreme Court decision permitting banks to operate small-town insurance agencies, includes many restrictions.
For one thing, it would not begin to take effect until the year 2000. Beginning then, banks would be allowed to sell insurance through 25% of their branches.
The following year, they would be able to increase sales to include 50% of their offices. In 2003, they could sell through 75%.
The underwriting provision, however, would be negated by a Federal law that forbids banks to underwrite insurance, with few exceptions.
Hawaii legislators included the provision because severe hurricane damage has driven many traditional insurance providers out of the state, said Raymond Muraoka, senior vice president of the Hawaii Bankers Association.
If Governor Cayetano signs the bill, Hawaii would become the seventh state to grant underwriting privileges to banks, according to Michael White, a Radnor, Pa.-based consultant. He added that 22 other states have granted their banks some insurance sales powers.