Bank Insurance Agency Activities Summary

The Gramm-Leach-Bliley Financial Modernization Act, passed by Congress in late 1999, authorized a variety of new activities for banks in the securities and insurance fields. Although Missouri banks, trust companies and savings banks already possessed many of the new powers, Missouri enacted a law in 2000 that authorized the remaining powers for Missouri institutions. Because the Division of Finance routinely gets questions from bankers about what types of "financial modernization" powers are available for their charters, we have prepared the summary below as a short review of the current status of one of the most commonly sought financial modernization powers: insurance agency.

The following is a brief summary of the current powers of Missouri state chartered banks, trust companies and savings banks to conduct insurance agency activity. The summary is arranged so that you can identify your institution's type of charter and the precise type of activity or fact pattern that applies.

Missouri State Chartered Bank

Direct Bank Sales

The following powers are available directly by the bank or through a regular bank operating subsidiary. Operating subsidiaries require no approval by or filings with the Division of Finance. Operating subsidiaries are different from the newly authorized "financial subsidiaries" created by Gramm-Leach-Bliley, which are discussed below and have special regulatory requirements.

Credit and Title Insurance Sales

All Missouri state chartered banks can sell credit related insurance, such as credit life insurance and title insurance, in connection with the bank's lending activities.

Insurance Sales from Towns of 5,000

All Missouri state chartered banks can sell all types of insurance from any office located in a place of 5,000 population or less.

Bank Financial Subsidiary Sales

All Missouri state chartered banks may establish a "financial subsidiary" to sell any type of insurance from any office in any town of greater than 5,000 population. A financial subsidiary is a new type of subsidiary created by Gramm-Leach-Bliley that is subject to certain regulatory requirements, such as capitalization standards and other safety and soundness considerations of the Division.

Third Party Contract for Insurance Sales

All Missouri state chartered banks may contract with a third party which could sell all types of insurance to customers at any office of the institution, regardless of population of the area. The third party could be an unaffiliated entity, an affiliate company or a holding company. These contracts may be subject to certain insider and related entity restrictions, such as 20 CSR 1140-2.051 and Section 23B of the Federal Reserve Act.

Missouri State Chartered Trust Companies and Savings Banks

Direct Sales

All Missouri state chartered trust companies, either depository or nondepository, and Missouri savings banks may sell any type of insurance from any office of the institution, regardless of population of the area. These institutions do not have to create a financial subsidiary to perform these activities, but could use an operating subsidiary if desired.

Third Party Contract for Insurance Sales

All Missouri state chartered trust companies, either depository or nondepository, and savings banks may contract with a third party which could sell all types of insurance to customers at any office of the institution, regardless of population of the area. The third party could be an unaffiliated entity, an affiliate company or a holding company. These contracts may be subject to certain insider and related entity restrictions, such as 20 CSR 1140-2.051 and Sections 23A and 23B of the Federal Reserve Act.