**BOARD OF GOVERNORS OF THE**

**FEDERAL RESERVE SYSTEM**

**FEDERAL DEPOSIT INSURANCE CORPORATION**

**OFFICE OF THE COMPTROLLER OF THE CURRENCY**

**OFFICE OF THRIFT SUPERVISION**

#### Interpretive Letter #960

February 28, 2003 **April 2003**

#### 12 C.F.R. 14

Ms. Beth L. Climo

Executive Director

American Bankers Insurance Association

1120 Connecticut Avenue, NW

Washington, D.C. 20036

Mr. James D. McLaughlin

Director

Regulatory and Trust Affairs

American Bankers Association

1120 Connecticut Avenue, NW

Washington, D.C. 20036

Re: Insurance Consumer Protection Rules

Dear Ms. Climo and Mr. McLaughlin:

This is in response to your letter dated March 6, 2002, in which you
requested our agencies to clarify the position we expressed in our
August 17, 2001 letter concerning the applicability of the disclosure
requirements in section 305 of the Gramm-Leach-Bliley Act[^1] ("GLBA")
and our insurance consumer protection regulations[^2] to renewals of
insurance policies sold prior to October 1, 2001 ("pre-existing
policies"). Your request provided additional information concerning the
feasibility and practicality of providing the insurance and credit
disclosures in connection with renewals of pre-existing policies.

Our August 17, 2001, letter stated that while other sections of the
agencies' regulations implementing section 305 of the GLBA apply to
renewals, the disclosure requirements in 12 C.F.R. §§ 14.40, 208.84,
343.40, and 536.40 do not apply to renewals. However, the letter also
indicated that these disclosures "should be made" to customers at the
time of the first renewal if a policy was initially sold before the
rule's effective date (October 1, 2001) and the consumer did not receive
the disclosures at the initial sale. You expressed concern in your March
6 letter that this position posed significant practical difficulties for
depository institutions.

You also stated in your March 6 letter that nothing in section 305 of
the GLBA suggests that the insurance and credit disclosures are required
in connection with renewals of pre-existing policies.

In supplementary materials submitted by Ms. Climo on June 12, 2002, you
reiterated your position that section 305 of the GLBA by its terms does
not necessarily require that the insurance and credit disclosures be
made in connection with renewals of pre-existing policies. In addition,
you provided a detailed explanation as to why it would be difficult for
depository institutions to make the disclosures in connection with
renewals of pre-existing policies. You stated that a depository
institution typically has no contact with the customer after the
depository institution sells the customer an insurance policy, and the
underwriter (or its agent) completes the renewal of an insurance policy.

In addition, you noted that a depository institution usually does not
have lists of customers who purchased insurance offered by an agent who
solicited on behalf of the depository institution prior to October 1,
2001, nor do agents that sold insurance policies prior to October 1,
2001, on behalf of a depository institution always track the source of
their insurance business after the policies are in effect. You advised
us that it would be very difficult, or impossible, for an agency to
examine its records and determine solicitations and sales on behalf of a
depository institution.

On the basis of this additional information, as well as the terms of
section 305 of the GLBA itself, this is to clarify that our implementing
regulations do not [mandate]{.underline} disclosures for renewals of
policies sold prior to October 1, 2001. Accordingly, in our view section
47(c)(1) of the Federal Deposit Insurance Act, 12 U.S.C. § 1831x, as
added by section 305 of the GLBA, and our implementing regulations at
12 C.F.R. §§ 14.40, 208.84, 343.40, and 536.40, do not require that the
disclosures be furnished at the time of renewal of a policy, including a
pre-existing policy. Renewals, however, continue to be subject to the
other provisions of section 305 of GLBA and the agencies' regulations.
Moreover, we also expect that, consistent with applicable safety and
soundness requirements, depository institutions will take reasonable
steps to avoid customer confusion in connection with renewals of
pre-existing policies.

We hope that this clarification is helpful and responds to the concerns
you have expressed on behalf of your members.

Sincerely,

\- signed - - signed -

[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}
[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}

J. Virgil Mattingly, Jr., General Counsel William F. Kroener, III,
General Counsel

Board of Governors of the Federal Deposit Insurance Corporation

Federal Reserve System

\- signed - - signed -

[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}
[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}

Julie L. Williams, First Senior Deputy Carolyn J. Buck, Chief Counsel

Comptroller & Chief Counsel Office of Thrift Supervision

Office of the Comptroller of the Currency

[^1]: 12 U.S.C. § 1831x.

[^2]: 12 C.F.R. Parts 14, 208, 343, and 536.