Preemption Determination

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

[Docket No. 97-01]

Preemption Determination

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Reopening of comment period.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is

reopening the public comment period on the OCC's notice and request for

comment regarding a request it has received for a preemption

determination regarding certain provisions of the Rhode Island

Financial Institution Insurance Sales Act.

DATES: Comments must be received by May 15, 1997.

ADDRESSES: Comments should be sent to the Communications Division, 250

E Street, SW, Third Floor, Washington, DC 20219. Attention Docket No.

97-01. In addition, comments may be sent by facsimile transmission to

FAX number

[[Page 12884]]

(202) 874-5274 or by Internet mail to [email protected]

Comments will be available for inspection and photocopying at the E

Street, SW, location. Appointments for inspection of comments can be

made by calling (202) 874-4700.

FOR FURTHER INFORMATION CONTACT: Suzette Greco, Senior Attorney,

Securities and Corporate Practices Division, (202) 874-5210 or Stuart

Feldstein, Assistant Director, Legislative and Regulatory Activities

Division, (202) 874-5090.

SUPPLEMENTARY INFORMATION: The OCC has been asked to determine whether

certain provisions of the Rhode Island Financial Institution Insurance

Sales Act (FIISA), pertaining to sales of insurance by financial

institutions, are preempted by provisions of Federal law. On January

14, 1997, the OCC sought comment on this request by notice published in

the Federal Register (62 FR 1950). The deadline for submission of

comments was February 13, 1997.

As the Federal Register notice and request for comment indicated,

the Rhode Island law imposes a number of requirements upon financial

institutions engaged in the solicitation and sale of insurance that

differ from the requirements that apply to other insurance agents and

agencies. The request for a preemption determination contends that

these special requirements prevent or significantly interfere with the

ability of a national bank to exercise its authority under 12 U.S.C.

92. See Barnett Bank of Marion County, N.A. v. Bill Nelson, Florida

Insurance Commissioner, et al., 116 S.Ct. 1103, 1109 (1996) (stating

that state laws are applicable to national banks provided they do not

``prevent or significantly interfere'' with national banks' exercise of

their powers).

Section 92 authorizes a national bank ``located and doing business

in any place the population of which does not exceed five thousand * *

* [to] act as the agent for any fire, life, or other insurance

company,'' to ``solicit[] and sell[] insurance,'' to ``collec[t]

premiums,'' and to ``receive for services so rendered * * * fees or

commissions,'' subject to rules and regulations prescribed by the

Comptroller of the Currency. The FIISA special requirements include a

provision prohibiting banks from requiring or implying that the

purchase of insurance products from a bank is related to receiving

another banking product or service, a provision restricting where a

bank's licensed agent can solicit the sale of insurance, a provision

prohibiting certain bank employees from soliciting and selling

insurance, a provision requiring separate applications for loans and

insurance, and a provision limiting the ability of a bank to use its

customer information to solicit and sell insurance.

The OCC is reopening the comment period until May 15, 1997, to

allow interested parties the opportunity to consider the effect, if

any, of a pending Rhode Island regulation that would implement the

FIISA. On December 13, 1996, the Rhode Island Department of Business

Regulation (DBR), Insurance Division, published notice of its proposal

to promulgate Regulation 90, a rule that would apply to the sale of

insurance by financial institutions in Rhode Island. Copies of the

proposed regulation are on file at the DBR. Subsequently, on February

10, 1997, the DBR held a public hearing on proposed Regulation 90. The

DBR has stated that it intends to file Regulation 90, as amended to

reflect any changes from the proposed rule, with the Rhode Island

Secretary of State in early April, 1997. The final regulation is

expected to take effect in mid-1997.

In addition, the comments received to date on this matter raise

certain points on which additional information would be helpful to the

OCC. Specifically, the OCC invites commenters to address the following

issues:

1. How would national banks have to change the way they conduct

their insurance sales activities to conform to the provisions of the

FIISA that are described in the January 14, 1997 Federal Register

notice? Commenters should address with specificity any business or

operational adjustments, and associated costs, involved in conforming

their operations to the FIISA provisions.

2. The FIISA contains certain requirements intended to address the

potential for customer confusion with regard to bank sales of

insurance. What other approaches, including other formal mechanisms,

are available to ensure that consumers are adequately protected?

3. Would any of the provisions of the FIISA described in the OCC's

previous notice disproportionately impact community banks with respect

to personnel or other costs?

4. To what extent would any of the FIISA provisions impact the

ability of banks to use streamlined physical facilities which employ

fewer staff and rely on technology to a greater extent than a

traditional branch? To the extent there was any impact, how would

customer convenience be affected? Would any of the provisions have a

detrimental affect on convenient availability of a full line of

products to customers?

5. Banks operating in low-income areas increasingly are seeking to

develop more efficient, low-overhead facilities and delivery systems

when providing products and services in these areas. Would compliance

with any provisions of the FIISA result in operating costs and burdens

that would deter banks from providing insurance in low-income areas and

thereby lessen access to a full line of financial products and services

in low-income communities?

6. What effect do recent amendments to the Fair Credit Reporting

Act, 15 U.S.C. 1681 et seq., have on the FIISA provisions limiting the

ability of a bank to use its customer information to solicit and sell

insurance? The OCC welcomes comments on these issues and on any aspect

of the FIISA on which the OCC has been asked to consider preemption.

Dated: March 11, 1997.

Eugene A. Ludwig,

Comptroller of the Currency.

[FR Doc. 97-6708 Filed 3-17-97; 8:45 am]

BILLING CODE 4810-33-P