Insurance Agencies Operated by StateChartered Banks

PURPOSE: National banks in places with populations of five thousand persons or fewer are permitted by virtue of the National Banking Act to operate insurance agencies which can sell all types of insurance. State-chartered banks have not been given specific authority for this activity leaving them at a competitive disadvantage especially where state and national banks occupy AND INSURANCE the same place with populations of five thousand persons or fewer. Expanding the authority will serve the public by providing convenient insurance services at competitive prices. This rule also clarifies permissible insurance-related activities for banks located in places with populations over five thousand. Section 362.105, RSMo explicitly empowers the director of finance, with the approval of the State Banking Board, to issue rules granting powers and authorities to state-chartered banks which would give competitive equality with federally-chartered institutions. This rule authorizes insurance agencies in state-chartered banks on the same basis as national banks are authorized. PUBLISHER’S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. Therefore, the material which is so incorporated is on file with the agency who filed this rule, and with the Office of the Secretary of State. Any interested person may view this material at either agency’s headquarters or the same will be made available at the Office of the Secretary of State at a cost not to exceed actual cost of copy reproduction. The entire text of the rule is printed here. This note refers only to the incorporated by reference material. (1) State-chartered banks or their facilities in any place having a population of five thousand (5,000) persons or fewer according to the last decennial census are authorized to operate insurance agencies to the extent national banks are so authorized by 12 U.S.C. 92. (2) A state-chartered bank may lease a portion of its premises to insurance agents or agencies. Where the lease involves an officer, director, employee affiliate or principal shareholder as defined in 4 CSR 140-2.050, those lease arrangements may not be for a period longer than one (1) year and must provide reasonable compensation to the bank; a minimum of twenty percent (20%) of the commissions generated shall be considered reasonable. A full accounting of the calculation of that compensation must be made to and approved by the bank’s board of directors at the board’s organization meeting following the annual stockholders’ meeting; the details of the compensation, including gross commissions received by the agency, the portion received by the bank as compensation, and any fees or other payments made by the agency to the officers, directors, and principal shareholders, shall be entered into the board’s minutes and disclosed to the shareholders at the annual shareholders’ meeting. (3) Income from the sale of any credit-related insurance shall be treated as though it were income from the sale of credit life insurance according to 4 CSR 140-2.050. AUTHORITY: sections 361.105, RSMo 1986 and 362.105, RSMo Supp. 1992.* This rule originally filed as 4 CSR 140-2.051. Original rule filed June 12, 1984, effective Nov. 11, 1984. Moved to 20 CSR 11402.051, effective Aug. 28, 2006. *Original authority: 361.105, RSMo 1967; 362.105, RSMo 1939, amended 1949, 1963, 1965, 1967, 1977, 1983, 1986, 1990, 1991, 1992.