Representatives for companies that sell financial services products on military bases were more critical today than other witnesses at a hearing on the Defense Department’s proposed base sales reforms.[@@]
The department held the hearing at a library in Arlington, Va., near the Pentagon, to gather comments on the proposed reforms. The proposed revisions would change existing regulations to make it clear that military base insurance sales fall under the jurisdiction of state insurance regulators. The revisions also would give commanders the authority to bar agents and companies from military bases.
One witness at the hearing, Frank Meredith, spoke for Trans World Assurance Company, San Mateo, Calif., and another witness, Larry Hill, spoke for a Trans World affiliate, American Fidelity Life Insurance Company, Pensacola, Fla. Trans World and American Fidelity both sell financial services products to military personnel.
Although Defense Department officials have made “significant strides in improving” the military base sales regulation, Trans World has concerns about a change that would remove language requiring a “show cause” hearing before a commander can bar an insurance agent or company from a base, Meredith said.
Requiring commanders to hold “show cause” hearings would give agents and companies an opportunity to explain their side of the story, Meredith said.
“I understand that commanders have to command and make decisions based on the welfare of their troops,” Meredith said. But he argued that a decision based on bad information could prove to be unfair to soldiers who have done business with an agent or company as well as to the agent or company.
With bad information, “commanders will make wrong decisions,” Meredith said. “That wrong decision will affect the commander and his troops.”
Hill said the original regulation appeared to provide an advantage for banks and credit unions over insurance companies on military grounds, and he said the revision “makes no bones about its clear favoritism.” He said the revised rule would give banks and credit unions a “virtual monopoly” on military bases
John Dohmen, associate director of the Insurance Marketplace Standards Association, Washington, suggested that all companies offering insurance products on military base grounds should be IMSA-certified.
Requiring IMSA certification would ensure that those companies would have transparent business practices and adhere to “needs-based” sales strategies, Dohmen said.
“All consumers == including America’s military men and women – deserve fair, clear and concise advice and information from life insurance companies and their representatives when they are considering buying financial services products,” Dohmen said.
The American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., say they will be submitting comments on the proposed regulation before the end of the public comment period in June.