Magazine article American Banker

R.I. Banks Seek Veto to Preserve Their Right to Sell Insurance

Magazine article American Banker

R.I. Banks Seek Veto to Preserve Their Right to Sell Insurance

Article excerpt

Bankers are mounting an 11th-hour campaign in Rhode Island to block a law that would bar most bank employees from selling insurance.

The Rhode Island governor, Lincoln Almond, has until Thursday to sign or veto the bill, which bank lobbyists view as the latest flareup in their war to gain insurance powers. That bill would apply to bank employees involved in lending and deposit taking.

Winning final approval last week by the state House of Representatives, the Rhode Island measure adhered closely to a prototype developed by the Independent Insurance Agents of America. The American Bankers Association has been fighting these proposals state by state.

"Rhode Island has been very aggressive in developing laws that are attractive to banking," said William A. Farrell, general counsel of the Rhode Island Bankers Association. If the banks fail to win a veto, he said, "it will kill any sort of competitive advantage a bank might have in selling insurance here."

The ABA is asking state trade group executives to get the banks' position across to local lawmakers. On July 25, the ABA sent the 50 state associations a four-page memo alerting them to the insurance lobby's "last ditch effort in the statehouses to impede bank insurance activities."

At least one other state - Illinois - has shown serious interest in the agents' proposal. A measure containing a number of their provisions was introduced in the state Legislature. But lawmakers postponed action until January to give bankers and insurance agents a chance to reach a compromise.

Although banking groups are complaining, the agents' representatives describe their initiative as pro-consumer.

"We've got to get legislation at the state level that would definitively protect consumers," said Jeff Myers, a spokesman for the Independent Insurance Agents. "There are unique aspects that need to be considered when banks sell insurance. …

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