When House Commerce Committee Chairman Thomas J. Blilely introduced a bill late last month that would empower state insurance commissioners to regulate bank insurance sales, the stage was once again set for two major lobbying forces to lock horns.
It's the American Bankers Association versus the Independent Insurance Agents of America. The agents are largely responsible for the contents of the Virginia Republican's bill.
Paul A. Equale, senior vice president of government affairs for the agents group, along with lobbyists Robert A. Rusbuldt and Phil B. Anderson, called a press briefing last week to push their case.
The agents flatly denied the ABA's claim that the Blilely bill is an attempt to shut down banks' annuities activities. Mr. Rusbuldt called it a "most hysterical and dangerous red herring" produced by the banking industry.
"We are simply trying to create a level playing field," Mr. Equale said. "The bill is not designed in any way, shape, or form to take away powers from banks that they currently have.
"We want nothing from the banking industry except to be left alone - unlike the banking industry, which has been trying to make incursions into our territory."
One distinct advantage that banks enjoy over agents, Mr. Equale and his colleagues argued, is access to proprietary information.
"If you're writing four checks a month to a cardiologist, there's no way a bank is going to write life insurance on you," Mr. Rusbuldt said. "We don't have access to depository information, and many consumers do not know that banks use private information."
That argument did not cut much ice with the ABA.
"The idea that banks use information from consumers' checking accounts to determine whether to sell insurance is absurd - banks just don't do that," said Edward L. Yingling, the ABA's chief lobbyist.
As the briefing progressed, it became apparent that the agents simply do not think banks should be in the insurance business at all.
"They want to be in insurance because they think that's where the money is," Mr. Equale said. "But . . . the banking industry had a record profit year last year, and in our opinion they should stick to their knitting and be the best bankers that they can be."
For its part, the ABA labels the agents' arguments as "economic protectionism." In a letter recently sent to House lawmakers, Mr. Yingling said the Blilely bill is an outright attempt to overturn the Supreme Court's decision allowing national banks to sell annuities. The Valic case pitted NationsBank Corp. against Variable Annuity Life Insurance Co.
"This bill is an attempt to rewrite the law and derail the joint marketing agreements between insurance companies and banks which have proliferated since the Supreme Court's unanimous January 1995 decision that national banks may sell annuities," Mr. Yingling wrote.
The court's ruling upheld a decision by the Comptroller of the Currency that selling annuities was "incidental to banking."
While the agents counter that insurance companies as well as agents support the Blilely bill, the ABA insisted that the agents are trying to defend their traditional turf.
"This is a last, desperate attempt by the insurance agents to protect their market share," said ABA lobbyist Philip Corwin. "They're like a wounded bear - still very dangerous."
Yet the agents insisted the bill is simply an attempt by Rep. Blilely to keep insurance regulation at the state level, and nothing more.
"Chairman Blilely has told us he really doesn't care either way whether banks are in the insurance business or not," Mr. Rusbuldt said. "It is his goal to make sure that everybody in Richmond, Va., is playing by the exact same rules, and that the Comptroller of the Currency cannot overturn what the Richmond legislature wants to do."
"We think we win on the merits - we think we win because we're right," Mr. Equale added.
The agents may very well be right, but with the ABA offering a valid case as well, the lines have been drawn for a serious battle.