agencies in small communities under a new option for offering insurance products. In a recent interpretive letter, the Office of the Comptroller of the Currency said national banks may provide customer referrals to a group of independent insurance agents and share in the sales commissions. "This provides a whole new basis for building insurance activities," said David Roderer, a partner here with Goodwin, Procter & Hoar. "National banks' ability to sell insurance products is no longer limited to sales through agencies in small communities." Richard M. Whiting, general counsel at the Bankers Roundtable, said the ruling will help banks "round out" their stable of financial services but cautioned that providing referrals "is not a substitute for a direct relationship with insurance customers." To sell insurance directly, however, national banks must establish an insurance agency in a community with 5,000 or fewer residents. The agency letter, dated Feb. 27, was released recently with several other opinions. Acting Comptroller of the Currency Julie L. Williams said insurance sales are included among the many types of activities for which national banks may provide referral services. "The OCC has long recognized that national banks may act as 'finders' by providing referral or other services related to a wide variety of products, including insurance," wrote Ms. Williams, who was the agency's chief counsel until this month. Other common finders services include referrals for real estate, data processing, and telemarketing services. "National banks have had authority to sell mailing lists to insurance firms; this latest opinion is really a variation of that," Mr. Whiting said. But the opinion for the first time gives banks clear guidance on how they may share insurance commissions with outside agents, Mr. Roderer said. Under the OCC's ruling, banks providing finders services may offer customer referrals and hand out brochures and vendor listings. Solicitations and final sales, however, must be completed by licensed insurance agents who are employed outside the bank. But an OCC official added that banks will be required to obtain insurance licenses in states that prohibit splitting of commissions between agents and nonagents. The OCC's opinion was issued after a group of independent insurance agents told the agency that they were planning to set up a referral program with small banks and wanted to find out if national banks could participate. The OCC did not identify the agents or any banks that have been asked to join the program. David C. Turner, vice president for state government affairs for the Independent Insurance Agents of America, called the OCC's opinion "troubling." "It could be a prelude to more changes in the OCC's quest to sweep away state restrictions while at the same time expand the powers of national banks," he said.

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