The Board’s policy statement
at
3-1556 generally prohibits individual employees, officers, directors,
and shareholders of a state member bank from personally profiting
by retaining commissions or other income from the sale of credit life,
health, accident, and mortgage insurance related to loans by a state
member bank. If a local insurance agency is hired by an out-of-state
insurance company to sell its credit life insurance in connection
with extensions of credit by a state member bank, and if an agent
of the local insurance company is also a member of the board of directors
of the bank, the Board’s policy statement may be applicable. If the
agency is an “affiliate” or “interest” of the director, or if the
director’s income would be directly increased as a result of the sale
of insurance by the bank, the policy statement appears to be applicable.
If not, the policy would not appear to bar the payment of insurance
commissions to the agency. STAFF OP. of April 22, 1982.
Authority: FRA § 11, 12 USC 248; FDIA § 8(b), 12 USC 1818(b).
