The Department of Defense has proposed regulations designed to curb abuses in the sale of life insurance and other financial products on military bases that follow closely consumer protection mandates contained in a bill now awaiting action on the House floor.
Life insurance industry trade groups voiced general support for the bill but did express concern about specific provisions. The American Council of Life Insurers said it would ask for clarification of rules regarding sales to those stationed overseas, while officials of the National Association of Insurance and Financial Advisors said it “had some concerns about the process by which agents may be disciplined or barred from military posts.”
The proposal carries a 60-day comment period; a public hearing on the proposed rules will be held May 6 in Arlington, Va.
The proposed regulation requires closer cooperation between military authorities and civilian regulators, including state insurance commissioners. It also requires the DOD to create and maintain a master list of disciplinary actions against sales agents at military bases and that such a list be made available to legal personnel at all bases.
A NAIFA spokesman said an initial review of the proposal indicates that NAIFA has no objections because it is consistent with reforms contained in the legislation that NAIFA already has said its members can support. NAIFA is “optimistic about the potential the proposed regulation will have in protecting our servicemen and women,” the spokesman said.
Under this proposal, the spokesman said, “it appears military personnel will receive the same protections afforded every consumer, including access to the wide range of insurance products available in the marketplace and the best possible advice provided by a fully licensed insurance professional.”
The spokesman said NAIFA has encouraged the DOD for some time to work with state insurance regulators to oversee insurance transactions that take place on military posts. “NAIFA is pleased that the proposed regulation recognizes the role of state insurance regulators,” the spokesman said, and looks forward to working with DOD officials to improve the final rule.
Jack Dolan, an ACLI spokesman, said, “The proposed rules would strongly increase supervision of life insurance sales to military personnel. They are responsive to abuses uncovered but importantly dont appear to deny our military personnel from obtaining coverage they may want and need.”
Dolan said no particular distribution method is targeted by the proposal. “It does impose new and rigorous rules relating to sales overseas and well have to evaluate them further,” he said. “But again, the industry shares the desire to straighten out this situation and applauds the DOD on its work.”
Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 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.