Consumer Groups May Back Sales of Insurance by Banks

The American Bankers Assn. is close to winning support from key consumer groups for legislation permitting banks to sell insurance nationwide.

In return, the bankers would agree to certain consumer safeguards in the legislation.

The negotiations involve three giant consumer groups: the American Assn. of Retired Persons, the Consumer Federation of America and the National Insurance Consumer Organization.

The parties hope to wrap up the negotiations by Labor Day, intending to have compromise legislation ready for Congress to consider next year, said Philip Corwin, who deals with consumer-banking issues for the Bankers Assn.

Corwin said it will be difficult for likely opponents--such as insurance agents, who have battled to keep banks out of their business--”to attack the accord on the basis of it not protecting consumers.”

“I think it’s a good idea,” Joe Belew, president of the Consumer Bankers Assn., said of the new legislative initiative.

Any bank in the 50 states and the District of Columbia would be able to sell, but not underwrite, all types of insurance--but only if it scored one of the two highest grades for Community Reinvestment Act compliance.

Banks would have to disclose the underwriter of their policies, how much of the premium goes to a bank agent, and quality ratings like those provided by A. M. Best & Co.