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PIA Lauds NAIC on Decision to File Supporting Brief in Lawsuit Against Comptroller of the Currency

WASHINGTON, June 26, 2003 - The National Association of Professional Insurance Agents (PIA) today lauded the decision by the National Association of Insurance Commissioners (NAIC)...
June 26, 2003

WASHINGTON, June 26, 2003 - The National Association of Professional Insurance Agents (PIA) today lauded the decision by the National Association of Insurance Commissioners (NAIC) to file a brief in support of PIA's petition to the United States Supreme Court asking for a hearing on lower court rulings in lawsuits against the Office of the Comptroller of the Currency (OCC).

"We welcome the assistance of the NAIC in our action to bring a halt to the OCC's overreaching," said PIA National President Carl Stoecklin. "The OCC seems to think that banks should be afforded special privileges when it comes to insurance sales and that it can sweep aside, through regulatory fiat, consumer protection laws enacted by the states. We say it cannot."

The petition to the U.S. Supreme Court asks justices to hear an appeal of a ruling by the Fourth Circuit Court of Appeals. At issue are opinions issued by the OCC declaring specific state consumer protection statutes in West Virginia and Massachusetts preempted. In response to lawsuits against the OCC, the Fourth Circuit ruled that the OCC opinion had authority to preempt state law under the Gramm-Leach-Bliley Act (GLBA), while the First Circuit ruled that the OCC's opinion had no legal effect on the states.

In arguing for the Supreme Court to hear an appeal, PIA and co-petitioner the Independent Insurance Agents and Brokers of America state there is a conflict between the First and Fourth Circuit Court rulings that must be resolved by the High Court.

"The Fourth Circuit upheld an opinion letter by the OCC which erroneously states the legal standard for preemption of State laws relating to solicitation and cross-marketing activities by national banks," the NAIC amicus brief states, adding that if left to stand this "would set a dangerous precedent under which the OCC could preempt State laws in a manner wholly contrary to Congress' intent in establishing the functional regulation framework in GLBA [the Gramm-Leach-Bliley Act]."

PIA believes the OCC is attempting to illegally expand the scope of its limited regulatory role with respect to insurance matters, that it does not have the authority to determine whether the state insurance sales regulations at issue are preempted, that the basis upon which they assert that the Gramm-Leach-Bliley Act (GLBA) is preempted is wrong, and that the OCC's actions are arbitrary, capricious and in violation of law.

"We have known for some time and demonstrated by the issues raised in this litigation that OCC believes it decides the rules by which banks conduct their insurance activities, and that it is fine with OCC if the insurance rules applying to banks are more permissive and lax than compared to any other entity engaging in the insurance business," said PIA Senior Vice President of Government Affairs Patricia A. Borowski.

"Congress created the concept of functional state regulation of insurance through the McCarran-Ferguson Act in 1945. Again in the Gramm-Leach-Bliley Act in 1999, Congress continued that mandate by making it clear that the NAIC, state departments of insurance and state legislatures are the functional oversight regulators of insurance and make the rules for all those participating in the insurance sector. In our view, the law is that clear," Borowski said.

Read a copy of the NAIC amicus brief.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses.