WASHINGTON - The Office of the Comptroller of the Currency has received its second request in a month to preempt state laws that interfere with bank insurance sales.
The Massachusetts Bankers Association has asked the OCC to use its enhanced authority under the Gramm-Leach-Bliley Act of 1999 to override parts of a state law that prohibits bank employees from referring prospective customers to insurance agents working in the bank.
The 1998 law was a victory for independent insurance agents because it restricts bank sales of insurance. It also bars banks from giving employees referral fees, and requires that a bank approve a credit application before even informing applicants that the bank sells insurance.
West Virginia bankers filed a similar preemption request on May 8. Both requests argue that laws in their states conflict with Gramm-Leach-Bliley, which says state statutes may not "prevent or significantly interfere" with bank insurance sales.
"These prohibitions 'significantly interfere' with the ability of a depository institution to engage in insurance sales, solicitation, and cross-marketing activities," Massachusetts Bankers Association executive vice president Kevin F. Kiley wrote in a May 30 letter to Comptroller of the Currency John D. Hawke Jr.
The OCC published a notice in the Federal Register on June 2 seeking public comment on the West Virginia Bankers Association request, and expects to publish the Massachusetts group's request soon.