Members of the U.S. House Financial Services Committee voted unanimously by a voice vote Wednesday to approve legislation regulating the sale of insurance products on military bases.[@@]
The bill, H.R. 458, has support from life insurers and life agents, and an earlier version of the bill passed the full House in 2004 by a 396-2 vote.
The Senate took no action on the issue in 2004, and observers believe prompt Senate action on the issue is also unlikely this year.
Georgia insurance regulators have been leading multistate efforts to investigate allegations of wrongdoing and persuade several insurers to agree to settlements.
Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, and Sen. Paul Sarbanes, D-Md., ranking member of the committee, said in a joint statement late in 2004 that they would hold a hearing on the issue. So far, no hearing has been scheduled.
The bill the House Financial Services Committee reported out Wednesday would ban the sale of contractual mutual funds and make it clear that state insurance commissioners do have jurisdiction over military bases located within their borders, as well as over military installations overseas.
The legislation would require that military personnel be informed about life insurance available from the federal government prior to the sale of any private insurance.
States are directed to develop standards to further protect members of the armed services.
The American Council of Life Insurers, Washington, put out a statement praising the committee’s vote for H.R. 458.
“The committee’s vote signals strong bipartisan support for curtailing abusive life insurance and mutual fund sales practices at military installations,” ACLI President Frank Keating says in the statement. “The soldiers protecting us deserve no less than a full commitment to help them financially, which is why life insurers strongly support H.R. 458.”
The bill was introduced Feb. 1 by Rep. Geoff Davis, R-Ky.
Commenting after the vote, Davis said, “We can’t allow these practices to continue.”
He added that, “We must not ask our military to make sacrifices for our freedom without promising them financial protection in return. My wife and I lost nearly half our life savings after investing in a similar scheme when I was a young soldier. Unfortunately, retired officers and high-ranking enlisted personnel lend their names to such companies who then access bases to make sales pitches to impressionable, young troops.”
Davis explained his investment decision by saying, “I made the decision to invest not because I was experienced in financial matters but because a retired service member was working as a salesman and pushing a product with the referral from other veterans.”
In other news on Capitol Hill, the House Committee on Education and the Workforce has approved H.R. 525, a bill that would authorize the formation of national association health plans that would be free from state health coverage mandates.
Small business groups are supporting the bill, saying it would help member employers enjoy the same freedom from state mandates that sponsors of large, self-insured health plans now enjoy.
But many health insurers are opposing the bill, arguing it would encourage employers with young, healthy employees to join poorly capitalized AHPs while leaving traditional carriers with the burden of insuring older, sicker groups.
An insurance producer group, the National Association of Insurance and Financial Advisors, Falls Church, Va., put out a statement welcoming committee approval of the military base life sales bill but criticizing committee approval of the AHP bill. NAIFA officials say the AHP bill would hurt patients by encouraging small employers to join AHPs that would be exempt from state patient protection rules.