As the House Financial Services Committee prepares to mark up legislation restricting sales of insurance on military bases, an investigation into the sales practices on Georgia military bases launched 5 weeks ago by state Insurance Commissioner John Oxendine appears to be rapidly mushrooming.
One immediate fruit of the investigation is a decision by companies owned by American Amicable Life Insurance Company of Waco, Texas, to refund premiums paid for the controversial policies to soldiers at Fort Benning, Ga.
Oxendine said the company agreed to make the refundsestimated at $1,000 per soldierafter he met with the companys CEO recently. Oxendine said that since the investigation has spread within a 5-week period from one company, American Amicable, in one state, to 3 companies in 3 different states, he believes that, “as a practical matter,” the refunds will be made on a “nationwide basis.”
He said that as a result of his decision to launch market conduct examinations of 3 companies, an “ad-hoc” group of commissioners from Texas, Florida and Illinois have joined in the probe. “We are all cooperating and sharing information, although each state is just looking now at protecting consumers in their state. Other states are likely to join in, and we welcome that,” Oxendine said.
Asked whether state regulators have authority to oversee sales of insurance at military bases at a Senate Banking Committee hearing last Wednesday on insurance regulation, New York Superintendent Greg Serio said, “We havent thought they were beyond our reach.”
Serio said there have been communication problems between regulators and the Department of Defense. As a result, “any effort [by Congress] to help clarify the issue of state regulation of sales practices on military bases would be helpful,” he said.
However, Serio said an outright ban of a company from a base “would only solve half the problem” and could lead to an “outside the gate” situation.
For his part, Oxendine explained that he began the market conduct investigation by asking to look at the books and records of American Amicable; an affiliate, Pioneer American Life, also of Waco; Trans World Assurance of San Mateo, Calif., an affiliate; American Fidelity Life Insurance Co. of Pensacola, Fla.; and the Madison National Life Insurance Company of Middleton, Wis.
Already, American Amicable has fired 3 agents, placed another on probation, rescinded a promotion to regional director of another agent, and barred an agency that has been selling its products from selling insurance on-site at military bases, Oxendine said.
The probes of Trans World, its affiliate, and Madison National just began last week, he said.
On the legislative front, Rep. Mike Oxley, R-Ohio, chairman of the House Financial Services Committee, said his committee would mark up legislation dealing with sales of life insurance on military bases after it marks up a bill extending the Terrorism Risk Insurance Act for 2 years. At the same time, the chairman and ranking minority member of the Senate Banking Committee released last Wednesday a letter to the General Accounting Office requesting a study of the scope and substance of sales on military bases.