N.Y. Comp. Codes R. & Regs. tit. 3, § 6.3 – Additional insurance powers of banks and trust companies.

(a) The superintendent hereby finds that the promulgation of this section is consistent with the policy of the State of New York as declared in section 10 of the New York Banking Law and thereby protects the public interest, including the interests of depositors, creditors, shareholders, stockholders and consumers and is necessary to achieve or maintain parity between banks and trust companies and national banks with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions.
(b) The superintendent hereby finds that title 12, United States Code, section 92, and title 12, Code of Federal Regulations,^* section 7.1001, permit national banks located and doing business in places the population of which does not exceed 5,000 persons to sell insurance directly. Such power of national banks to sell insurance directly pursuant to title 12, United States Code,* section 92, was unanimously upheld by the United States Supreme Court in the case of Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 116 S. Ct. 1103 (1996).
(c) Banks and trust companies located and doing business in any place the population of which does not exceed 5,000 inhabitants, as shown by the last preceding decennial census, may act as the agent for any fire, life, or other insurance company authorized by the authorities of the state in which the bank is located to do business in such state, by soliciting and selling insurance and collecting premiums on policies issued by such company; and may receive for services so rendered such fees or commissions as may be agreed upon between the bank or trust company and the insurance company for which it may act as agent; provided, however, that no such bank or trust company shall in any case assume or guarantee the payment of any premium on insurance policies issued through its agency by its principal; and provided further, that the bank shall not guarantee the truth of any statement made by an assured in filing his or her application for insurance.
(d) This section is applicable to any office of a bank or trust company when the office is located in a place with a population of less than 5,000, even though the principal office of such bank or trust company is located in a place with a population exceeding 5,000.
(e) Banks and trust companies engaging in the business of insurance pursuant to this section shall do so subject to regulation by the department and pursuant to all the insurance laws, rules and regulations, provided, however, that the superintendent, in consultation with the Superintendent of Insurance, may exempt banks or trust companies from any insurance law, rule or regulation which has been preempted under Federal law, rule or regulation for national banks if such law, rule or regulation has been preempted because it applies to insurance activities of banks or trust companies and not to insurance activities of other entities.
(f) Banks and trust companies engaging in the business of insurance pursuant to this section shall comply with the following requirements relating to the sale of insurance.
1. (1) Except with respect to a credit unemployment insurance policy, group credit life insurance policy, a group credit health, group credit accident or group credit health and accident policy, or similar group credit insurance covering the person of the insured, banks, trust companies and any person soliciting the purchase of or selling insurance on the premises thereof, must disclose or cause to be disclosed in writing, in clear and concise language, to their customers and prospective customers who are solicited therefor that any insurance offered or sold:
  1. (i) is not a deposit;
  2. (ii) is not insured by the Federal Deposit Insurance Corporation; and
  3. (iii) is not guaranteed by the bank or trust company.
2. (2) Except with respect to a flood insurance policy, or a credit unemployment insurance policy, group credit life insurance policy, a group credit health, group credit accident or group credit health and accident policy, or similar group credit insurance covering the person of the insured, when a customer obtains insurance and credit from a bank or trust company, then the credit and insurance transactions shall be completed through separate documents. The expense of insurance premiums may not be included in the primary credit transaction without the express written consent of the customer.
3. (3) Banks and trust companies shall not extend credit, lease or sell property of any kind, or furnish any services, or fix or vary the consideration for any of the foregoing, on the condition or requirement that the customer obtain insurance from the bank or trust company, its affiliate or subsidiary, or a particular insurer, agent or broker. This prohibition shall not prevent a bank or trust company from informing a customer that insurance is required in order to obtain a loan or credit, that loan or credit approval is contingent upon the customer's procurement of acceptable insurance, or that insurance is available from the bank or trust company; provided, however, that the bank or trust company shall also inform the customer in writing that his or her choice of insurance provider shall not affect the bank or trust company's credit decision or credit terms in any way. Such disclosure shall be given again prior to or at the time that a bank, trust company or person selling insurance on the premises thereof solicits the purchase of any insurance from a customer who has applied for a loan or extension of credit.
  (g)
4. (1) Preemption of Insurance Law, section 2501. Pursuant to section 2501 of the Insurance Law, a licensed insurance agent or broker who is owned or controlled, directly or indirectly, by a bank shall not negotiate any insurance policy covering real or personal property which is the subject matter of, or security for, a loan or extension of credit made by the bank or by any other bank which is owned or controlled, directly or indirectly, by such bank. For purposes of section 2501 of the Insurance Law, the term bank includes, among other entities, a national bank whose principal office is located in New York.
5. (2) The superintendent hereby finds that the restrictions of section 2501 of the Insurance Law are preempted with respect to banks and trust companies. The superintendent further finds, that section 2501 of the Insurance Law has been preempted because it applies to insurance activities of banks and trust companies and not to insurance activities of other entities. In support of such findings, the superintendent takes note that the United States District Court for the Western District of New York has ruled in the case of New York Bankers Association, Inc. et al. v. Neil D. Levin, et al., 97-CIV-6423T, March 27, 1998, that section 2501 of the New York State Insurance Law is preempted by title 12, United States Code, section 92, and the superintendent may not impose the restrictions of section 2501 of the Insurance Law against a national bank doing business pursuant to title 12, United States Code, section 92, in a place the population of which does not exceed 5,000 inhabitants.