State Officials, Insurers Discuss Rules for Selling in Bank Branches
MEMPHIS -- Both sides in the dispute over Craddock Insurance Agency's sales of policies in First Tennessee Bank lobbies have until Oct. 30 to file legal briefs following a hearing last week on proposed regulations to govern the sales.
About 120 bankers, insurance agents, lobbyists, and executives attended the session called in Nashville by Tennessee Commerce and Insurance Commissioner John Neff.
Craddock, a Memphis independent insurance agency, is leasing space at six Memphis branches and two Knoxville branches of First Tennessee Bank to sell insurance policies underwritten by Aetna Life & Casualty Co., Hartford.
First Tennessee, the state's largest bank holding company, has 135 branches. Its headquarters is in Memphis.
Independent insurance agents said they supported proposed state rules that would restrict cooperation between banks and insurance companies in the sale of policies.
The agreement between Craddock and First Tennessee calls for the bank to furnish lists for its customers to Craddock. The agency's payments to the bank are based on a percentage of sales.
Also, First Tennessee has inserted ads for Craddock auto insurance policies in checking account statements mailed to bank customers during the past few weeks. William S. Craddock Jr., president of the agency, said he did not believe those mailings constituted an illegal referral. The proposed regulations, if approved as written, would ban such a practice. Separated from Loan Areas
State Attorney General Mike Cody told Mr. Neff on Aug. 13 that the Cradock-First Tennessee arrangement was legal if the insurance agents were separated from bank loan areas to avoid possible intimidation of loan customers, if the bank did not refer insurance customers to Craddock, and if the bank couldn't advertise Craddock's insurance. …