A week after deciding the Barnett Banks case, the Supreme Court took two steps Monday to solidify the banking industry's right to sell insurance from small towns.

First, the court refused to hear an appeal from Kentucky's insurance commissioner who in 1990 barred Owensboro National Bank from the business.

The justices also overturned a Louisiana court decision that prevented First Advantage Insurance Inc., a subsidiary of First National Bank of Denham Springs, from selling insurance from a town with fewer than 5,000 people.

With many of the legal questions settled, sources on both sides of the debate are turning their attention to what regulations will govern bank insurance sales.

"Increasingly, this debate is becoming more about how banks sell insurance in small towns as opposed to if," said Phil Anderson, director of federal affairs for the Independent Insurance Agents of America. "We are going to do everything we can at the federal level to protect consumers and fair competition at the state level."

Said Ballard Cassidy, executive vice president of the Kentucky Bankers Association: "The smart thing to do is for everyone to sit down and come up with some good consumer-oriented regulations for how this is going to get done."

Officials at the Office of the Comptroller of the Currency in January began meeting with state insurance regulators to develop guidelines for national banks that will help ensure safe and sound insurance sales.

Charlie Bullock, president of Owensboro National Bank, refused Monday to reveal how his $430 million-asset bank plans to use its court victory. But he did say, "I hope it's good for us and the whole industry as well."

Philip S. Corwin, a partner with Federal Legislative Associates, a government affairs company here, described Monday's Supreme Court actions as "the immediate legal ripples from Barnett.

"State anti-affiliation laws must yield to Section 92" of the National Bank Act, which permits banks to sell insurance from small towns, Mr. Corwin explained.

In Barnett, the Supreme Court reversed lower court decisions upholding a Florida state statute that banned banks from the insurance business.

The Louisiana state court relied on those lower Florida court decisions in making the First Advantage ruling. Now that the Supreme Court has reversed the Florida courts, it vacated the ruling against First Advantage and instructed the Louisiana courts to reconsider the case.

Another pending bank-insurance lawsuit may get a boost from the Supreme Court's rulings.

Deposit Guaranty National Bank in Jackson, Miss., on Monday expanded its lawsuit against Mississippi's insurance commissioner. Rather than simply seeking the right to sell annuities, Deposit Guaranty amended its lawsuit to include a wide range of insurance products.

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