Georgia Seeking To Revoke Military Sales Agencys License
By Matt Brady
Georgia Insurance Commissioner John Oxendine will “reconvene” a hearing to revoke the license of an insurance agency and its principal over the alleged improper sales of life insurance products to soldiers at military bases in the state early next month.
After hearing testimony on the sales practice of agents with Associates Financial Group, Inc. at Fort Stewart in the southeastern part of the state on Nov. 15, Oxendine “recessed” the hearing until Dec. 2, when additional testimony will be heard at Fort Benning, near Columbus.
Oxendine said regulators “received a lot of testimony from Fort Stewart,” and added that the case is “still open.”
At Fort Stewart, Oxendine said 8 soldiers, 2 of whom are currently retired, offered their testimony.
“They testified about what they thought they were buying,” he said. “They thought they were buying investments, savings accounts and mutual funds, but really it was insurance. Many testified that they didnt think that was what they were buying.”
None of the soldiers had had any money refunded as of the hearing, according to the commissioner.
The subject of the hearing was Jacques Frym, principal agent and CEO of Associates Financial Group, and Diana Frym, chief financial officer and secretary for the firm. Ms. Frym, Fryms wife, is an officer of the company but not a licensed agent, according to their lawyer.
Joe Cragen, the lawyer for the Fryms and Associates at Morris Manning Martin in Atlanta, was not available for comment.
Oxendine is seeking to revoke Fryms license. Additionally, Frym and some of the other agents at the firm have been barred from selling products underwritten by American Amicable Insurance Company of Texas, whose policies have been at the root of the investigation.
Although the soldiers at Fort Stewart provided a lot of testimony, Oxendine said he “hasnt heard all the evidence.” Additionally, he said he “will not make a decision until all the evidence is in.”
The hearing and effort to determine whether the license of the Associates agency should be revoked is part of an ongoing probe of sales on military bases that Oxendine is conducting. He said he has issued several additional subpoenas of agents the department believes may have sold insurance on military bases. Five insurers and several agents are being investigated, besides the probe into the activities of Associates and the Fryms.
Oxendines investigation is perhaps the one that is furthest along into the issue of improper sales on military base grounds, but other regulators and policy makers are pursuing the issue. The military sales issue, and how it should be remedied, has been debated in Congress and during meetings of the National Association of Insurance Commissioners.
In Congress, legislation introduced by Rep. Max Burns, R-Ga., would clarify the authority of state insurance commissioners over the sales of insurance products on military bases in their states, set jurisdiction for sales on overseas bases and require insurance commissioners and the Department of Defense to maintain lists of agents that have been barred from military installations and to share that information with other base commanders.
Additionally, the bill would prohibit the sale of contract mutual funds, a product allegedly sold by agents on bases as an insurance product, but which is considered unsuitable for soldiers entering combat. The product, which Rep. Burns and other lawmakers have noted has virtually disappeared from the civilian market, comes with fees of as much as 50% of premiums in the first year.
Burns legislation, H.R. 5011, was passed by the House in early October and is currently awaiting action by the Senate Banking Committee. It is unlikely to be acted upon by Congress this year but could be taken up early in the next Congress, which convenes in January.
Oxendine noted that other states also have begun their own investigations into the matter.
Reproduced from National Underwriter Edition, November 24, 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.