Letter to the NAIC on the Revised Exposure Draft of Model #672

Dear Chair Dwyer and Members of the Working Group:

The ABA Office of Insurance Advocacy ("ABA") submits these comments on the revised exposure draft of Model #672. We support modernizing privacy practices, but modernization should not displace the federal framework Congress established for depository institutions and their affiliates that sell, solicit, or cross-market insurance—or the calibrated approach the NAIC adopted when it last aligned this model with federal law. Preserving that framework protects state regulatory authority while avoiding unnecessary restrictions on lawful competition, consumer choice, and the ability of banks to offer insurance products. We therefore ask the Working Group to add an express savings clause preserving the federal framework that governs those institutions and activities.

In Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25 (1996), the Supreme Court held that a State may not prevent or significantly interfere with a national bank's authority to sell insurance. Congress codified the Barnett standard in the Gramm-Leach-Bliley Act and extended it to all depository institutions and their affiliates. The statute does two things at once: it preserves state insurance regulation while providing that no State may, by statute, regulation, order, interpretation, or other action, prevent or significantly interfere with the ability of a depository institution or an affiliate to engage in insurance sales, solicitation, or cross-marketing.

Congress then listed thirteen safe harbors that survive that limit. A State "may impose any of the following restrictions, or restrictions that are substantially the same as but no more burdensome or restrictive than those in each of the following clauses." Those clauses are a ceiling, not a floor.

Download the letter to read the full text.