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IIABA Argues Against Preemption of West Virginia Consumer Protection Provisions

Tells Appeals Court OCC Ruling Undermines Insurance Regulatory Authority

RICHMOND, Va., Oct. 30 - The Independent Insurance Agents & Brokers of America today joined the state of West Virginia in presenting oral arguments in a federal appeals court in opposition to a U.S. Office of the Comptroller of the Currency (OCC) opinion letter stating that key parts of the state’s insurance laws are preempted by the Gramm-Leach-Bliley Act (GLBA).


The U.S. Fourth Circuit Court of Appeals, based in Richmond, Va., granted IIABA’s motion to intervene in the case of the State of West Virginia vs. OCC.


IIABA retained counsel Scott Sinder focused his arguments on the true intention of Congress in enacting GLBA (Public Law 106-102); the fact that GLBA places just one limitation on insurance regulators and it is irrelevant to this case; and the reality that West Virginia’s Insurance Sales Consumer Protection Act does not undermine the ability of banks to sell, solicit or cross-market insurance products.


With respect to insurance, one of the purposes and objectives of Congress in passing the Gramm-Leach-Bliley Act was to allow bank holding companies and subsidiaries of banks to engage in insurance agency activities provided that they comply with state insurance laws,” Sinder explained to the three-judge appeals court panel. “The only limitation on a state’s right to regulate insurance activities is that no state may ‘prevent or significantly interfere with’ the ability to engage in insurance sales, solicitation or cross-marketing activities. Regardless of the scope of that standard, the West Virginia consumer protection provisions—which primarily require consumer notices and protection from credit tie-ins—clearly do not violate that test.”


IIABA believes that the OCC’s West Virginia preemption determination violates not only the letter but also the spirit of the GLBA, which endorses functional regulation and leaves oversight of insurance activities squarely in the hands of insurance regulators.


“We are not fighting wars of the past, but we need to recognize that insurance laws and the authority of insurance regulators need to be upheld, or it could put the insurance industry at a competitive disadvantage when other regulators determine they don’t like a law,” said IIABA CEO Robert A. Rusbuldt. “This issue is not about banks selling insurance. The United States Supreme Court has determined that banks can sell insurance, and the GLBA determined that banks can even own insurance companies. Banks can sell insurance in the state of West Virginia; no one is trying to turn back the clock on the Supreme Court decision. This issue is about the parameters of the regulators and whether functional regulation is fact or fiction.”


During today’s hearing, Sinder cited several significant interference cases with rulings stipulating that insurance laws not be preempted. He also noted that the challenged provisions do not undermine the ability of financial institutions to exercise insurance powers.


Sinder noted that the West Virginia Bankers Association (WVBA) initially consented to the state law, and Sinder cited dozens of banks successfully selling under the contested law, including the largest agency in West Virginia, which is a bank subsidiary.


“The OCC is ignoring the fact that functional insurance regulation already is in place in this country and it has been codified by the Gramm-Leach-Bliley Act,” said Sinder. “The far-reaching effects of the OCC’s predisposed opinion will impact thousands, and possibly millions of consumers.”


Last year, the OCC issued an opinion that several integral provisions of West Virginia’s Insurance Sales Consumer Protection Act are preempted by GLBA and the Supreme Court’s Barnett Banks decision. Key consumer protections singled out in the opinion by the OCC include:


·         Protections for consumers against credit coercion.

·         Restrictions on sharing of personal information between bank loan and insurance affiliates.

·         Conditions requiring separate areas for loan/deposit and insurance operations.

·         Parts of the state law covering the manner and timing of consumer disclosures.


Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address:



​127 South Peyton Street
Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

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