Magazine article American Banker

OCC Ruling Lets Banks Give Referrals to Insurance Agents

Magazine article American Banker

OCC Ruling Lets Banks Give Referrals to Insurance Agents

Article excerpt

National banks can skip the hassle of setting up agencies in small communities under a new option for offering insurance products.

In a recent interpretive letter, the Office of the Comptroller of the Currency said national banks may provide customer referrals to a group of independent insurance agents and share in the sales commissions.

"This provides a whole new basis for building insurance activities," said David Roderer, a partner here with Goodwin, Procter & Hoar. "National banks' ability to sell insurance products is no longer limited to sales through agencies in small communities."

Richard M. Whiting, general counsel at the Bankers Roundtable, said the ruling will help banks "round out" their stable of financial services but cautioned that providing referrals "is not a substitute for a direct relationship with insurance customers." To sell insurance directly, however, national banks must establish an insurance agency in a community with 5,000 or fewer residents.

The agency letter, dated Feb. 27, was released recently with several other opinions. Acting Comptroller of the Currency Julie L. Williams said insurance sales are included among the many types of activities for which national banks may provide referral services.

"The OCC has long recognized that national banks may act as 'finders' by providing referral or other services related to a wide variety of products, including insurance," wrote Ms. Williams, who was the agency's chief counsel until this month. Other common finders services include referrals for real estate, data processing, and telemarketing services. …

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