The House approved a bill Tuesday that is designed to clarify the jurisdiction of state regulators over sales of insurance products on military bases and protect enlistees from inappropriate sales practices and products.[@@]
The vote on the bill, H.R. 5011, was 396-2, with 2 conservative Republicans, Reps. Jeff Flake of Arizona, and Ron Paul of Texas, the only ones to vote no.
At the same time, Sens. Hillary Clinton, D-N.Y., and Michael Enzi, R-Wyo., were preparing at press time to introduce similar legislation in the Senate. However, given the fact that Congress is rushing to finish its most important business so it can adjourn Friday because its members want to campaign, most lobbyists don’t believe Congress will have time to act on the bill this year. The only hope is that it will be taken up in a lame-duck session scheduled to be held in late November.
Regarding the vote, the American Council of Life Insurers, Washington, and the Independent Insurance Agents and Brokers of America, Washington, have expressed strong support for the House action.
“The vote by the House reflects the dedication of both lawmakers and life insurers to stop abusive life insurance and mutual fund sales practices at military installations,” says ACLI President Frank Keating.
“The soldiers protecting us deserve no less than a full commitment to help them financially,” Keating adds. “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.”
Keating says he views the bill as “a key component of reform. We all want to help ensure that our soldiers are not coerced into purchasing financial products ill-suited to them and, just as importantly, that they have access to the life insurance products they want and need.”
In addition to imposing rules designed to stop what supporters say are abusive sales practices, H.R. 5011, the “Military Personnel Financial Services Protection Act,” would bar the sales of contract mutual funds, a product that lawmakers noted has virtually disappeared from the civilian market, and require that agents disclose that neither they nor their products are endorsed by the U.S. government or military. Additionally, the bill requires the Department of Defense and state regulators to maintain lists of banned agents and to share those lists with one another.
“This is an important step in guaranteeing that our young service members are protected from investment products with exorbitant commissions and from life insurance agents who push our soldiers into unnecessary and high-priced policies, frequently while trying to circumvent state regulation,” says Rep. Max Burns, R-Ga., who introduced the bill. “There’s no reason that any company selling these questionable plans can’t replace them with reputable products, as was the case in the civilian market.”
The bill came to the floor from the House Financial Services Committee, which approved the bill by a unanimous vote last week. Rep. Michael Oxley, R-Ohio, the chairman of the Financial Services panel, says Burns’ bill “will address this critical issue by helping to put an end to the long-standing problem of unscrupulous securities and life insurance firms who have been taking financial advantage of the men and women in our armed forces.”
Burns’ bill would place jurisdiction for sales on military bases with the states in which those bases are located. For sales taking place on military bases overseas, authority would rest with the regulator of the state in which the buyer has residence or the state that granted the agent involved a resident license.
Links to the text of the bill and other information about the bill are on the Web at http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.05011: