Some Georgia Agents Barred From Military Base

Washington

Commanders at Fort Benning, Ga., have restricted access or barred from the base “three or four” agents of a Hinesville, Ga., insurance agency whose license the Georgia Insurance Department wants to revoke.

Disclosure of the action by Fort Benning officials was made in a statement of facts that the department is using as the basis for its efforts to revoke the license of Associates Financial Group Inc. Some of the agents of the agency and its principal have also been prohibited from selling products underwritten by American Amicable Insurance Company of Texas since early September, according to an Oct. 8 statement of facts issued by the Georgia department.

A staff official at the department said approximately 8 or 9 agents who sold policies at Fort Benning are involved. The staff official said the agency is also seeking to lift the sales privileges of agents of Associates Financial who work at other military bases in the state.

“The actions of American Amicable were based upon the manner in which the product was marketed and sold and precipitated by the fact that the aforementioned agents had either received letters of exclusion or had privileges to solicit restricted, limited or revoked by Fort Benning for one or more violations of military regulations in the marketing and sale of insurance products,” the statement of facts says.

The department has scheduled a revocation hearing for Nov. 15 in Hinesville. The subject of the disciplinary action is Jacques Frym, the principal agent and CEO of Associates Financial Group, and Daiana Frym, who also serves as chief financial officer and secretary of the agency. Ms. Frym, Mr. Fryms wife, is an officer of the business but not a licensed agent, according to the Fryms lawyer.

The lawyer, Joe Cragan, of Morrs Manning Martin in Atlanta, has acknowledged receipt of the document. Frym is referring all requests for information to American Amicable. Cragan said, “We deny the allegations and believe they are inaccurate.” He declined further comment.

In commenting on the disciplinary action, a staff official of American Amicable in Waco, Texas, noted that the company is one of 17 insurers throughout the country notified of the pending action against Associates Financial. The companies are located in Texas, Wisconsin, Ohio and Colorado, according to the document.

The department said in the document that it wants to revoke the license for actions by its agents in sale of insurance products at either Fort Benning or Fort Stewart, Ga.

“The agents in the course of offering and marketing the American Amicable insurance products for sale referred to the same only in the most general of terms as a savings plan or an investment with a set amount of investment and rate of return or in words having similar import and meaning, but did not specifically describe, identify or disclose that the product primarily was an insurance plan,” the complaint states.

“At no time did the members of the armed forces solicited by agents for the Respondent clearly understand that they were being sold a product of insurance, as opposed to and distinguished from making a financial investment,” the complaint adds, noting, “The members of the armed forces solicited by agents for the respondent were misled or deceived by the statements that were made by the agent(s) regarding the true, but undisclosed nature of the product being sold.”

The show cause order by Insurance Commissioner John Oxendine against Associates Financial is the first legal document spelling out allegations against agents and carriers of insurance products sold to military personnel since a firestorm was created by July New York Times articles raising concerns about the suitability of insurance products sold to military personnel on or near their bases.

The controversy generated a bill passed by the House of Representatives last month, 396-2, that clarifies that sale of insurance on military bases is subject to state regulation and mandates substantive additional disclosures about the product to the member of the armed forces to whom the product is being marketed. It also bans sale of contract mutual funds on military bases, either in the U.S. or overseas, and it requires state insurance regulators and the Department of Defense to maintain a list of agents banned from military bases and to share that information with base commanders.

The controversy has also prompted members of Congress to ask the Government Accountability Office to study the issue, and the U.S. Attorneys Office in Philadelphia to subpoena certain records regarding these sales from American Amicable.

The National Association of Insurance Commissioners has also created an informal working group of commissioners to deal with the issue. The working group is headed by Oxendine.


Reproduced from National Underwriter Edition, October 28, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.