Legislation that would beef up consumer protections for service members buying life insurance and other products on military bases was passed unanimously by the Senate Banking Committee Wednesday.
The legislation contains stronger consumer protection provisions than one passed overwhelmingly by the House last June.
It is likely to face prompt Senate floor action, possibly before Congress departs for its July 4th recess.
That would set up a conference committee to resolve the differences between the bills passed by the two chambers, possibly before Congress departs for a month-long August recess.
The Senate bill is silent on predatory lending provisions contained in the House bill because the Senate plans to address that issue separately. These provisions govern such issues as payday loans that do not involve insurance products, according to one industry lobbyist.
The bill, S. 418, is also known as the Military Personnel Financial Services Protection Act. It was introduced by Senators Mike Enzi, R-Wyo., and Hillary Clinton, D-N.Y.
It would institute a number of reforms designed to help state regulators and the Department of Defense police insurance sales on military bases and eliminate unfair or deceptive sales practices.
“I think the provisions of this bipartisan bill are crucial for the protection of our Armed Forces and their families,” said Sen. Enzi in his opening statement for the hearing.
The bill would bar the sale of contract mutual funds, which have high fees in their early years and require a lengthy period of contributions to be of value to the buyer. Such funds would be unsuitable to someone who is being sent into combat or will be moving often from base to base, critics say.
The bill also spells out that military bases fall under the jurisdiction of the insurance department of the state in which it is located and encourages increased contacts between state regulators and military authorities. In addition, it would require the DoD to maintain a list of individuals who have been barred from a base for unfair insurance sales practices.
Enzi made the point that the bill targets the few bad actors rather than the industry as a whole.
Industry groups voiced support of the bill.
Frank Keating, president and chief executive officer of the American Council of Life Insurers, applauded the committee for moving the bill forward.
“The soldiers protecting us deserve no less than a full commitment to help them financially,” Keating added.
Also supporting the bill was the National Association of Insurance and Financial Advisors.