Summary: Pursuant to a congressional request, GAO evaluated the potential effects of banks selling insurance on consumers, other insurance sellers, and bank safety and soundness.
GAO found that: (1) banks could reduce consumers' insurance costs by lowering the costs of marketing and selling policies through joint marketing of bank and insurance products to customers; (2) since sales represented only a fraction of insurance costs, reductions in sales costs may not significantly affect premiums; (3) state regulatory oversight of insurance premiums may limit any seller's ability to affect premium rates; (4) there was limited evidence that banks coerced credit customers to buy insurance; (5) competition, banking internal controls, and regulatory oversight limited the occurrence of such abuses; (6) additional controls and oversight may hamper banking operations and diminish potential benefits for consumers; (7) expanded bank sales of insurance would increase competition among banks, other depository institutions, and lenders that sell insurance; (8) regulatory measures eliminating joint marketing of bank and insurance products would reduce banks' competitive advantage over other insurance sellers; and (9) bank sales of insurance underwritten by unaffiliated insurance companies would not endanger bank safety and soundness.
