WASHINGTON BUREAU — The House Veterans’ Affairs Committee has approved a proposal that could affect retained asset account (RAA) disclosures.
H.R. 5993, the Securing America’s Veterans Insurance Needs and Goals (SAVINGS) Act of 2010, would require insurers in the Servicemembers’ Group Life Insurance (SGLI) program that offer RAAs to provide information about the RAAs, including a comparison of the RAA interest rate and the rate the funds might earn if held in a financial institution, to the beneficiaries of soldiers who die.
The bill, introduced by Rep. Deborah Halvorson, D-Ill., also would require the U.S. Department of Veterans Affairs (VA) to report to Congress each year on the number of SGLI beneficiaries getting RAA counseling and any recommendations or complaints about the RAA counseling.
Rep. Bob Filner, D-Calif., chairman of the House Veterans’ Affairs Committee panel, says his committee and the House Government Reform and Oversight Committees both plan to hold hearings on RAAs by Oct. 14, before Congress leaves for its fall recess.
Filner’s committee sent H.R. 5993 to the House floor despite the opposition of Rep. Steve Buyer, R-Ind., the highest-ranking Republican on the panel.
Buyer said he believes the committee should hold a hearing on the issue before sending the bill to the floor.
Legislation similar to H.R. 5993 was introduced in the Senate just before the summer recess by Sen. Ben Cardin, D-Md. The Cardin bill is S. 3718, the Securing America’s Veterans Insurance Needs and Goals Act of 2010.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, has been asked to hold a hearing on the RAA before Congress departs in mid-October, but it is still unclear whether there will be time to do so, according to several industry lobbyists.
In related news, Birny Birnbaum, a consumer activist, has asked the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., to get more information from insurers about RAAs.
The current request for information “fails to ask for critical information necessary for any meaningful review of insurers’ use of retained asset accounts,” Birnbaum writes in a letter to the NAIC. “We do not see how regulators can evaluate how well RAAs are serving consumers without knowing how long these accounts are held and how many of the accounts are established and never fully used by the beneficiary. This information is essential for evaluating the claims made by defenders of RAA as a default option that consumers need some time to sort out the use of the policy benefits.”
Birnbaum says he would not expect consumers to use RAAs for more than a year or two if the defenders are correct. If accounts are held for longer periods, “that fact would be consistent with the concern that consumers do not fully understand the RAA and forget about or otherwise fail to use the benefits,” he says.