Insurance Sale Appeal Denied

The Supreme Court Monday left intact a ruling that lets state-chartered banks sell insurance if state law permits it.

The justices, without comment, rejected an appeal by insurance industry groups who said the Federal Reserve Board should be empowered to bar bank holding company subsidiaries from under-writing and selling insurance.

The 2nd U.S. Circuit Court of Appeals, ruling last June in favor of Citicorp, overturned a Fed decision that would have prevented the bank holding company from selling insurance through Family Guardian Life Insurance Co., a subsidiary of Citicorp’s Citibank Delaware unit.

The Fed had argued that it was authorized by law to regulate the non-banking activities of some bank holding companies.

Citicorp was permitted by Delaware law to engage in insurance activities through divisions or subsidiaries of banks chartered by the state.

Insurance agents led the fight to restrain such activities by banks. Some insurance companies, however, have said they would welcome the ability to sell through banks.

A 1990 Delaware law allowing banks to underwrite and sell insurance was aimed at attracting jobs and more state investment by banking companies that have large credit card operations there.