Academic journal article ABA Banking Journal , Vol. 93, No. 4
Now what? That was the basic question asked by two bank insurance organizations after the passage of the Gramm-Leach-Bliley Act late in 1999. The sweeping financial modernization legislation not only cemented the gains made by the Supreme Court's Barnett decision but removed many of the restrictions banks faced in the sale of insurance. It also added the ability to acquire insurance companies under the auspices of a financial holding company. For the American Bankers Association Insurance Association (ABAIA) and the Association of Banks in Insurance (ABI), passage of the legislation was the high water mark of their lobbying efforts for now.
"We said to ourselves, 'Now that the dog has caught the car, so to speak, what should we do?'" remarked David Holton, president, Wachovia Insurance Services, Winston-Salem, N.C., who has been active with both groups. The answer to that question came at the end of last month when the two organizations combined to form a new entity, the American Bankers Insurance Association (ABIA), a subsidiary of the ABA.
ABAIA, formed in 1997, was also a subsidiary of the ABA, acting as both an advocate and an advisory board to the ABA for issues relating to banks expanding their role in insurance. Its 14 member board comprised banking organizations already active in the insurance market.
ABI was founded as a trade group in 1973 by banks that had grandfathered insurance powers--Norwest and Chase Manhattan being two examples. In the late 1980s and 1990s ABI became more aggressive in lobbying for expanded insurance powers, according to Holton. Toward the end of the 1990s ABI and ABAIA increasingly worked together to accomplish their lobbying goals. All but four members of the ABAIA board were also on the ABI board.
Last year officials of both groups began conversations that led to last month's combination. Holton, who will be the new association's first president, says that while there are still important lobbying issues to work on, both groups realized that a great need existed among the banking community for help in taking advantage of the legislative and court victories relating to insurance, e. …