Texas lawmakers approved legislation last weekend that would let state-chartered banks sell insurance through branches anywhere in Texas.
The legislation would eliminate the requirement that they do insurance business through offices in towns with fewer than 5,000 residents, and it would streamline licensing requirements for banks and others.
Gov. George W. Bush Jr. is expected to sign it into law by mid-June. If so, it would take effect Sept. 1.
The bill was drafted by the state insurance department and backed by trade groups that represent bankers and insurance agents.
"It's huge for us," said Christopher L. Williston, president and chief executive of the Independent Bankers Association of Texas. "It eliminates a major hurdle that has prevented so many folks from entering this business."
Texas is the second state to take such action in recent weeks. Florida lawmakers adopted similar legislation in April; its law takes effect July 1.
The effort in both states was marked by cooperation among usually hostile industry factions. Observers said that could serve as an example for national trade groups that are bickering over federal reform.
Bankers and insurance agents found a mutual interest in the legislation, explained Ernie Stromberger, executive director of the Independent Insurance Agents of Texas.
It would alter Texas law to comply with guidelines adopted by the National Association of Insurance Commissioners to let insurance agents in one state be licensed automatically in others. Agents from states that do not agree to "reciprocal" licensing would be barred from selling insurance elsewhere.
The bill would open agency ownership to anyone and give agency owners more potential buyers. "This should enhance the value of any agency that is in the market to sell," Mr. Stromberger said.
For Texas bankers, this is the latest step in an evolution toward broad insurance sales powers. State-chartered institutions could not sell insurance until 1997, but a law enacted that year included the town-of- 5,000 limit. Cumbersome rules made getting licenses difficult, however.
The new law should benefit rural banks entering metropolitan areas to escape the agricultural crisis, Mr. Williston said. The existing law bars them from setting up permanent sales offices in cities and requires that transactions be processed at their small-town headquarters.