WASHINGTON - The Supreme Court agreed Wednesday to decide whether states can prevent national banks from selling insurance, promising to resolve years of squabbling between the two industries.

The justices accepted a case pitting Barnett Banks Inc. against the Florida insurance commissioner, who is trying to block the bank from the lucrative market. Insurance premium revenue topped $773 billion in 1993.

"It is a big deal, because it may lay to rest an extraordinarily complicated legal issue, that is, the role of the states when it comes to insurance sales by banks," said David Roderer, a partner at Winston & Strawn who represents several trade groups in the case.

The justices ordered the parties in Barnett v. Gallagher to file their briefs by December, making oral arguments in January likely.

The Barnett suit joins three other banking cases before the Supreme Court this year. The others focus on interbank check clearing disputes, loan collections against bankrupt borrowers, and innocent-owner defenses in asset forfeiture proceedings.

The Barnett case began in 1993 when the bank bought an insurance agency in a small town in Florida. The state insurance commissioner ordered the agency closed, citing a Florida law that prevents banks from selling the product. The bank sued, but lost at the trial court and federal appeals court levels. Those courts found that the 1945 McCarran-Ferguson Act gives states the right to regulate, and thus ban, bank insurance sales.

A different group of federal courts in a similar case involving Owensboro National Bank of Kentucky sided with the banking industry, ruling that the National Bank Act preempts state insurance restrictions. That act allows national banks to sell insurance from towns with fewer than 5,000 residents.

This conflict among lower courts virtually ensured a Supreme Court review.

Banks want the fee income that insurance sales can bring. The Association of Banks-in-Insurance estimated the products added $2.2 billion to banks' bottom lines in 1993.

Jerri Franz, a Barnett spokeswoman in Jacksonville, Fla., said the bank is fighting because it believes insurance sales are in the public's best interest.

"Certainly we are pleased the Supreme Court has agreed to hear our case," Ms. Franz said. "We have said consistently that banks have the right to sell insurance, and that we believe consumers will benefit from greater competition among insurance providers."

Julie Williams, chief counsel at the Office of the Comptroller of the Currency, said her agency is "delighted" that the justices have taken the case.

"We don't think McCarran-Ferguson is designed to protect state laws that keep entities out of the insurance business," Ms. Williams said. "McCarran- Ferguson is designed to allow states to regulate, not bar, how that business is conducted."

The insurance industry disputes that contention. Ann M. Kappler, a partner at Jenner & Block law firm in Washington, said Congress clearly delegated all insurance regulation to the states, including the power to prevent bank entry into the market.

She said she is confident the court will adopt her reasoning. "Thus far 12 judges have looked at this issue, and the banks have only convinced three of them," she said. "We like those odds."

Bankers are just as optimistic, citing their win in January when a unanimous Supreme Court ruled in the Valic case that national banks can sell annuities. "We are in the Supremes now," said Michael Crotty, deputy general counsel for litigation at the American Bankers Association. "Ms. Kappler has been there before. Ask her what the outcome was."

The Supreme Court's decision to hear the Barnett case could prompt Congress to accelerate efforts to restrict bank insurance sales, according to Joel Wood, vice president of government affairs at the Council of Insurance Agents and Brokers.

But banking industry observers took a different view. Mr. Roderer said lawmakers, stuck with an issue that pits two industries against each other, are likely to avoid the issue and let the court decide. This could free Congress to move its regulatory relief bill, he said.

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