Seeking to assuage congressional concerns raised by media reports regarding improper sales of insurance products to enlisted military personnel on military base grounds, the life industry last week offered its own proposals to lawmakers.
In a hearing of a House Financial Services subcommittee, industry representatives told lawmakers they support efforts to root out bad insurance agents and sales on military base grounds but not at the expense of legitimate insurers and agents losing their place at the table.
“While we must be steadfast in guarding against unethicaland possibly illegalsales practices, we believe the importance of ensuring that military men and women have access to insurance products cannot be overstated,” said David Woods, CEO of the National Association of Insurance and Financial Advisors, noting further that life insurance is especially important for members of the military who face the risks of going to war.
“Our military personnel put themselves in harms way every day,” Woods said in his testimony. “They owe it to themselves and their families to be on sound financial footing. Because a financial plan without life insurance is simply a savings plan that dies when the owner does, it is critical that life insurance be included as a key component in the general financial plan of any service man or woman.”
Frank Keating, president of the American Council of Life Insurers, also spoke of the importance of ensuring access to life insurance products for members of the military. Keating noted that ACLI, along with NAIFA, already has made several recommendations to help reduce instances of inappropriate sales, and would continue offering proposals.
“No industry can endanger its fundamental enterprise by tolerating misconduct in its core activities. We surely do not want our many good companies and agents unfairly tarred by a brush intended for a few,” Keating said, adding that ACLI was “anxious” to help lawmakers sort out the regulatory system for military sales. “We are convinced that the reason these issues continue to come up is because of the lack of clarity over who has the authority to oversee such sales and the absence of clear procedures to ensure the highest standards for dealing with men and women in uniform.”
In opening the hearing, Rep. Mike Oxley, R-Ohio, chairman of the committee, said, “New military recruits brought in for basic training are often young and relatively inexperienced on financial matters. They are trained to obey commands without questions and sometimes operate on little sleep. It is unconscionable, if true, that groups of recruits have been marched into compulsory briefings on veterans benefits by salesmen pretending to be financial planners that quick-step them into signing up for what turns out to be long-term life insurance.”
Oxley said he doesnt support a complete ban on sales of financial products on base, noting that he doesnt want to tarnish the good reputation of the agents. “But Republicans and Democrats in Congress can no longer pretend that this is about a few bad apples.” Oxley said he expects the NASD to announce the results of its investigation “in the near future.”