The Independent Insurance Agents of America and the National Association of Professional Insurance Agents, both based in Alexandria, Va., earlier filed suit to overturn the ruling.

"The OCC opinion letter threatens not only the three challenged provisions of the West Virginia Insurance Sales Consumer Protection Act, but state insurance regulation nationwide," said NAII's senior director and counsel, Mike Koziol. "This skewed opinion is a direct attack on functional regulation of insurance by the states, which would harm competition and damage consumers. Individual states should continue to be the regulators of the insurance business, not the OCC."

According to the NAII's brief, the federal agency overstepped the scope of its statutory authority in issuing its opinion, and failed to apply the appropriate standard for determining whether a state insurance law is preempted. The brief did not address the specifics of West Virginia law.

"We concur that the comptroller does not have the authority to determine whether state insurance laws are preempted," Mr. Koziol said. "Such sweeping preemption would not only be anti-consumer, it would be fundamentally anti-competitive."

The two agent associations that filed the lawsuit, along with the NAII, charge that the OCC letter "distorts and misinterprets" the "prevent or significantly interfere" standard developed by the Supreme Court in its Barnett Bank decision and reaffirmed directly in public policy by the Graham-Leach-Bliley Act.

The three groups argue that the OCC letter could result in exempting banks from any state regulation that imposes additional costs on their insurance agency activities unless that regulation specifically is protected by the GLB Act's safe harbor provision.

OCC's letter to West Virginia was followed this year by a similar directive to Massachusetts concerning that state's provisions relating to banks and insurance. The Massachusetts action gives added significance to the West Virginia case, Mr. Koziol said.

"If a bank regulator gets away with issuing a preempting opinion about whether a state law exceeds permissible scope, state regulation will be diminished," Mr. Koziol added.

The National Association of Insurance Commissioners has also filed a brief contesting the OCC action.

The NAII claims a membership of more than 690 property-casualty insurers writing more than 33 percent of the nation's total p-c insurance market.