ALTA® Letter to OCC Regarding Banks Engaging in Insurance
February 14, 2000
Office of the Comptroller
of the Currency
250 E Street, S.W.
Washington, D.C. 20219
Re: Docket No. 00-03
Comments of the Independent Insurance Agents of America, the National Association of Insurance and Financial Advisors, the National Association of Professional Insurance Agents, Inc. and the American Land Title Association
On behalf of the Independent Insurance Agents of America, the National Association of Insurance and Financial Advisors, the National Association of Professional Insurance Agents, and the American Land Title Association (collectively "Insurance Agents"), we submit these comments in response to the proposed rules issued by the Office of the Comptroller of the Currency ("OCC") on January 20, 2000, to amend its regulations to implement Section 121 of the Gramm-Leach-Bliley Act ("GLB Act"or "the Act"), P.L. 106-102. 1/ The Insurance Agents are non-profit trade associations that represent hundreds of thousands of insurance agents and their employees throughout the United States. Their members include insurance agents who work at all levels of the insurance market and sell a full range of insurance products, and title insurance underwriters who sell and underwrite title insurance and perform virtually all of the real estate closing services in the United States.
The sole purpose of filing these comments is to comment on the OCC?s inclusion of insurance agency and brokerage activities in the list of activities in which national banks can engage through an operating subsidiary. 2/ As the OCC recognizes both in its commentary in support of the proposed regulations and in the regulations themselves, national bank operating subsidiaries may engage only in "activities that national banks are permitted to engage in directly" and only if such activities "are conducted subject to the same terms and conditions that" are applicable if a national bank engages directly in such activities. /3 Any other subsidiary activities must be conducted in "financial subsidiaries" in accordance with Section 121 of the GLB Act.
Although the OCC?s revised proposed Section 5.34(v) states that the activities of national bank operating subsidiaries are limited to activities in which national banks can engage directly, the insurance agency and brokerage authority articulated in subpart (P) is not expressly limited in any way. It is clear, however, that national banks are authorized to act as insurance agents only if they are located and doing business in a small place within the meaning of 12 U.S.C. §92, or if the insurance sales activity also constitutes an activity that is part of, or incidental to, the business of banking within the meaning of Section 24(Seventh) of the National Bank Act, such as the sale of credit-insurance products or annuities. We believe that the proposed regulations should be clarified to make clear that the Section 5.34(v)(P) insurance agency and brokerage activities in which an operating subsidiary is permitted to engage are limited in this manner.
We also believe that the title insurance reference in Section 5.34(v)(P) to Section 303 of the GLB Act should be clarified to make clear that a national bank operating subsidiary is precluded from engaging in title insurance agency activities unless it qualifies for either the Section 303(b) parity exception or the Section 303(c) grandfather.
In closing, we also would like to note that we are pleased that the OCC recognizes the limitations in the GLB Act on permitting both operating subsidiaries and financial subsidiaries from engaging in underwriting activities, including title insurance underwriting activities.
We would be pleased to submit additional information or clarification as necessary.
Scott A. Sinder
Counsel for the Insurance Agents
1/ See 65 Fed. Reg. 3157 (Jan. 20, 2000).
2/See 65 Fed. Reg. at 5162, proposed 12 CFR §5.34(v)(P).
3/See GLB Act Section 121, 12 U.S.C. § 24a(g)(3).