ABA Seeks Safe Harbor for Banks in Insurance Model Law

The American Bankers Association last week urged the National Association of Insurance Commissioners to provide a safe harbor for banks and their affiliates in the insurance distribution business in its “suitability in annuity transactions” model law. ABA pointed out that banks in insurance distribution are already subject to stringent regulatory requirements.

“Adding another layer of regulations to an already contradictory and complex regime is unnecessary, duplicative and will ultimately result [in] banks exiting the business and limiting consumer choice,” ABA said. “While we understand that the model law is intended to aim for consistency, it is only reasonable to presume that not every state will be harmonized and ultimately banks will end up facing the issue of different states adopting different laws in addition to complying with the federal regime.”