On-line marketing can pave the way to greater revenue, but now that anyone can access on-line services nationwide, regional banks need to know how to advertise their services without running afoul of state laws.

In many states insurance product advertising requires regulatory approval, says Phil Corwin, a Washington, D.C.-based lobbyist. "Banks should be careful about stating where they are physically located, what types of products they sell and issuing appropriate disclaimers," he says.

Advertised services on the Internet are considered solicitations by some state insurance commissioners and subject to licensing or strict regulation. Recent surveys by the National Association of Insurance Commissioners show that 11 states consider offering general insurance information on the Web an advertisement. Thirty-three states consider quoting rates for specific products as advertising. Commissioners in 41 states are as concerned about unlicensed or unauthorized Web sales of insurance products as they are about Internet fraud.

Insurers argue that banks which sell insurance should be regulated by the insurance industry. Insurance groups have a bill before Congress to restrict insurance sales to a bank's local area, but passage is considered unlikely.

Meanwhile, the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision and Comptroller of the Currency also regulate insurance sales.

The Supreme Court's March 1996 ruling in Barnett Bank vs. Florida's Insurance Commissioner clarified the right of national banks to sell insurance. But federal regulators require banks to inform customers that insurance products are not FDIC-insured and are subject to investment risks.

-peterson tfn.com

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