Key federal and state regulators have pledged to work together to ease bank insurance sales in states where it has long been restricted.
At a Association of Banks-in-Insurance video conference last week, regulators warned bankers that removing or preempting state laws that are inconsistent with the Supreme Court's recent Barnett decision will be a long, arduous process. But they vowed to helped bankers as much as they can.
"We're committed to working with the banking industry to effect the Barnett decision - and with state regulators," said Julie Williams, general counsel at the Office of the Comptroller of the Currency.
In a decision issued in a case involving Barnett Banks Inc., the Supreme Court in March ruled that banks can sell insurance in towns with less than 5,000 people.
In response to a question about a current Ohio law that requires at least 51% of a bank's insurance sales to be conducted with noncustomers of the parent company, Ms. Williams said: "That sort of state statute is in big trouble. How you work it out is a big question."
Lee Douglass, Arkansas' insurance commissioner, is one state regulator grappling with such issues.
"The problem I've got and a lot of regulators have is that despite the Barnett decision, I can't ignore state law," Mr. Douglass said. "But I can't defend it in court."
The National Association of Insurance Commissioners may develop model laws that states can use as templates for reform, Mr. Douglass said. But, he acknowledged, the group "cannot tell the states what to do; we can only suggest."
In the meantime, Rick O. Bowman, president of U.S. Bancorp's insurance agency, dispensed advice to bankers based on his bank's experience selling insurance in five western states.
"It's critical to learn the insurance laws in each state ... and to look also at consumer-protection acts," said Mr. Bowman, whose bank is based in Portland, Ore. Once bank-specific barriers fall, bankers will still have to follow the same insurance laws as everyone else, he said.