Members of the U.S. House Financial Services Committee today voted 68-0 to approve a bill that could change the rules governing sales of insurance to military personnel.[@@]
Although the bill, H.R. 5011, enjoys broad support, it may have a hard time reaching the President’s desk this year because Congress wants to leave by Oct. 8, and the Senate has not said whether it will act on a military insurance sales bill.
The Financial Services Committee debated the bill and approved several amendments in the morning before holding off a final vote so it could consider legislation implementing changes in security activities proposed by the 9/11 Commission.
The military sales bill bars sales of contractual mutual funds on military bases and proposes a broad range of changes in oversight by both federal and state regulators. On the federal level, it mandates that the U.S. Securities and Exchange Commission, the NASD and the U.S. Department of Defense increase scrutiny of those selling insurance on military bases, and it requires prompt disclosure by the agencies of disciplinary actions taken against both carriers and producers for alleged abuses in sales of these instruments on military bases.
The bill also says “it is congressional intent” that the states undertake certain actions to improve oversight of sales on military bases within 12 months.
The legislation also implements several “good practices” designed to end abuses in sales of insurance to military personnel on bases as proposed by the American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va. These address functional regulation, education and military base market conduct in an effort to improve protections for military personnel.
At the same time, at the request of the 2 groups, the bill was amended to ensure that the restrictions don’t add additional requirements for the sale of variable products, such as annuities and variable life, on military bases.
Frank Keating, president of the ACLI, says the industry supports H.R. 5011, which was introduced in July by Rep. Max Burns, R-Ga. “It will go a long way toward stopping abusive life insurance and mutual fund sales practices at military installations” he says.
Keating says life insurers “support this measure because, in many ways, the reports of unscrupulous sales at some military installations have affected us as well. We in the industry were outraged to learn that the trust placed by our soldiers in some agents and products they purchased was misplaced. The life insurance industry takes pride in helping people achieve financial and retirement security.” He has called the bill a “key component of reform.”
Officials of the National Association of Insurance and Financial Advisers, Falls Church, Va., are also supporting the bill. “This bill does many of the things we have said all along are needed to ensure our military service men and women get the financial education they need to protect themselves and their families – in the best-regulated insurance environment possible,” C. Robert Brown, president of NAIFA, and David Woods, NAIFA’s chief executive officer, say in a statement about the bill.
Both Woods and Brown say they are pleased that the bill gives state regulators authority over the sale of life insurance on military bases.
“NAIFA has long been an advocate for the state-based regulation of insurance, and we have worked closely with the National Association of Insurance Commissioners to improve it,” Brown says. “For quite some time NAIFA has been concerned about the regulation of insurance on military bases. We have felt that the best way to address those concerns was for state insurance commissioners to assert their authority over military installations in their state.”