Newspaper article The Florida Times Union

Barnett Wins Ruling on Insurance Sales

Newspaper article The Florida Times Union

Barnett Wins Ruling on Insurance Sales

Article excerpt

The bank making your mortgage loan may one day offer you

homeowner coverage or any other kind of insurance -- directly

challenging the livelihood of insurance agents.

That is the possible result of a victory by Jacksonville-based

Barnett Banks Inc. in the U.S. Supreme Court yesterday.

Florida, along with 19 other states, prohibits banks from

selling insurance, but the Supreme Court ruled that states may

not prohibit nationally chartered banks from selling insurance

in towns with fewer than 5,000 residents.

And the general counsel in the Florida Insurance Commissioner's

Office says sales from a small-town bank branch could someday

expand to other areas.

"We believe that it's a victory not just for the banking

industry, but that it represents an important win for consumers

as well," said Jerri Franz, a Barnett spokeswoman. "Over the

long run, we believe the entry of Barnett and of other providers

into the insurance business will increase competition and mean

greater availability and a better deal for the consumer."

Barnett declined to say what its immediate plans are. "It's

premature at this time to give you specifics on our plans for

future insurance sales," Franz said. "We are reviewing the

decision."

Barnett and state insurance regulators began wrangling in 1993

when the bank bought the Linda Clifford Agency in Belleview, a

small town south of Ocala with about 2,700 residents.

The Department of Insurance ordered Barnett to stop its

insurance activities. Regulators argued state law barred

insurance sales by most banks and that bank customers seeking

loans may feel pressured into buying insurance policies.

But the Supreme Court said a 1916 federal law that allows

national banks to sell insurance in towns with populations under

5,000 pre-empted the Florida law.

The decision means Florida will join about 30 other states that

allow banks to sell insurance. However, national banks in

Florida could be limited to small towns -- for now..

John Milstead, executive vice president of the Florida Bankers

Association, which represents 325 banks and 55 thrifts, said he

didn't expect a stampede of institutions into the insurance

business. …

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