Insurers praised the recent decision by the National Association of Insurance Commissioners’ (NAIC) Functional Regulation Working Group to file an amicus brief against the Office of Comptroller of the Currency’s (OCC) opinion preempting state regulation of insurance on bank sales of insurance.
The OCC issued an opinion letter in late 2001 stating that federal law preempts certain elements of a West Virginia consumer protection statutes governing insurance sales and solicitation, maintaining that these provisions do not apply to national banks.
The National Association of Independent Insurers (NAII) joined two agent groups in their plan to file an amicus brief in the U.S. District Court of the District of Columbia challenging the OCC’s preemption opinion.
“NAII is pleased that regulators will join the fight and believe that NAIC’s support provides additional weight to the argument that individual states should be the regulators of insurance matters,” said Michael G. Koziol, NAII’s senior director and counsel. “In fact, NAII will go further on this issue by saying emphatically that the OCC does not have preemption authority over state laws.”
The Independent Insurance Agents of America and the National Association of Professional Insurance Agents have challenged the OCC opinion in a lawsuit that says that the appropriate environment for banks to clarify a state law is in the legislature.
Koziol added that NAII agrees with Working Group Chair Illinois Director Nat Shapo in his assessment that calls for Gramm/Leach/Bliley standards to be clearly interpreted (as “prevent or significantly interfere’) to avoid creating a loose standard that would set bad precedent.
“Repercussions of a bad precedent in this case could hurt the strength and validity of state regulation of insurance, particularly in the 20 states that have a similar statute,” Koziol said.
The OCC is expected to respond to the lawsuit in the next several weeks. The NAIC is expected to consider the recommendation of the Working Group shortly.
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