A measure that could change the rules governing sales of life insurance policies and other products to service members on military bases has won unanimous approval from the Senate Banking Committee.
The Senate military sales bill, S. 418, contains stronger consumer protection provisions than a military sales bill that the House passed in June 2005.
S. 418 is likely to face prompt Senate floor action, possibly before Congress leaves for its July 4 recess. If S. 418 passes, congressional leaders will have to set up a conference committee to resolve the differences between the House and Senate military sales bills.
Supporters of the changes in the military sales rules hope a conference committee will set to work before Congress starts its month-long August recess.
S. 418, also known as the Military Personnel Financial Services Protection Act, was introduced by Sens. Michael Enzi, R-Wyo., and Hillary Clinton, D-N.Y. Supporters say the bill would make reforms that would help state regulators and the U.S. Department of Defense police insurance sales on military bases and eliminate unfair or deceptive sales practices to members of the armed services.
“I think the provisions of this bipartisan bill are crucial for the protection of our armed forces and their families,” Enzi said in an opening statement at the hearing.
The Senate bill would bar the sale of contract mutual funds, which come with unusually high fees in their early years and require a lengthy contribution to be of value to the buyer. Critics of contract mutual funds say the products are unsuitable for someone who is being sent into combat or will be moving often from base to base.
The bill also:
–States that a military base falls under the jurisdiction of the insurance department of the state in which it is located.
–Encourages increased communication between state regulators and military authorities.
–Requires the Department of Defense to maintain a list of individuals who have been barred from a base for unfair sales practices.
The House bill contains a provision dealing with “predatory lending,” but the Senate bill is silent on that issue because the Senate plans to address predatory lending in another measure, lawmakers say.
The predatory lending provision in the House bill deals with matters such as payday loans and does not appear to affect insurance products.
Insurance industry groups have supported S. 418.
Frank Keating, president of the American Council of Life Insurers, Washington, applauded the Senate Banking Committee for “moving forward a bill to curtail abusive life insurance and mutual fund sales practices” on military base grounds.
“The soldiers protecting us deserve no less than a full commitment to help them financially, which is why life insurers strongly support S. 418,” Keating said.
Also supporting the bill was the National Association of Insurance and Financial Advisors, Falls Church, Va.