New Rules on Insurance Products
Banks considering getting into the business of insurance should note new consumer disclosure rules on insurance sales recently published by the federal banking regulatory agencies.
The new rules, which implement a section of the Gramm-Leach-Bliley Act, basically ensure that financial institutions that sell insurance make it clear to consumers that the insurance products are not federally guaranteed, that some investment risk may be involved, that insurance products or annuities are not deposits, and that the institution cannot predicate credit granting decisions on whether someone buys an insurance product. The location of insurance sales and payment of referral fees also is addressed in the rules. The new rules are effective April 1.
Copyright © 2001 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 11, No. 1, 1/01
First published on 01/01/2001