Bankers, insurance agents, and their regulators have come up with a host of suggestions for improving the Office of the Comptroller of the Currency's draft insurance sales guidelines.

In comment letters, insurance groups sternly criticized the guidance, while bankers lauded them. But each side laid out a number of changes it wants to see in the final version.

Under the draft proposal, released June 20, national banks must follow state licensing, training, and consumer protection laws. But the agency said banks may challenge other types of state insurance laws, and the agency will make case-by-case determinations on which ones apply.

In doing so, the agency will rely on the recent Barnett case, in which the U.S. Supreme Court said state laws may not prevent or significantly interfere with banks' insurance operations. The agency is expected to issue final guidelines early next month.

In a joint comment letter, five insurance trade groups said the guidelines misstate the standard established by Barnett the case for determining which state laws the agency can preempt. Instead of ignoring state laws that interfere with national banks' insurance business, the agency plans to preempt statutes that discriminate against banks, the groups charged.

"The use of the amorphous and misleading term 'nondiscriminatory,' which will only encourage banks to resist compliance with legitimate state laws, should be eliminated in the final advisory," noted the groups, which included the Independent Insurance Agents of America and the National Association of Life Underwriters.

The National Association of Insurance Commissioners had broader concerns with the agency's power to preempt state laws.

"Congress, state legislatures, and courts, not the OCC, should determine whether state laws apply in particular circumstances," the commissioners wrote.

Bankers, on the other hand, heaped praise on the proposal, calling it "an excellent product." However, they took issue with some provisions that they said would erode a bank's ability to sell insurance efficiently.

Richard E. Swartley, general counsel of Barnett Banks Inc., Jacksonville, Fla., asked the agency to omit a paragraph suggesting that banks should request customer permission before disclosing personal information to third parties.

"Appropriate use of customer information for rational and effective marketing is a critical competitive issue for banks," Mr. Swartley wrote. "It is premature for the OCC to suggest that any particular procedures applicable to the use of customer information are preferred or recommended."

The American Bankers Association suggested the agency modify its recommendation that banks determine whether insurance products are "appropriate" for particular customers.

The ABA said that determining the appropriateness of an auto or home insurance policy for a certain customer is unnecessary because these products do not pose investment risks. The trade group recommended that the provision apply only to universal or whole life insurance.

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