A Montana state bill (H.B. 542) modeled after the federal “Military Personnel Financial Services Protection Act” (S. 418) was tabled in the Montana House Business and Labor Committee, chaired by Rep. Scott Mendenhall (HD 77). The bill was tabled along a party line vote with Republicans voting to table the bill and Democrats voting to keep the bill alive.
Montana State Auditor John Morrison slammed insurance lobbyists and House Republicans for tabling the bill which would implement the federal Act protecting military personnel from unscrupulous sales of insurance and investment products. Since insurance is regulated at the state level, the act directs individual states to work with the Secretary of Defense to implement the new law.
“I am pleased that Congress did the right thing by recognizing the authority of state insurance regulators to protect military personnel,” Morrison said. “Unfortunately local insurance lobbyists convinced Republican committee members to table the bill. The men and women who protect our nation deserve to be protected against con artists trying to pedal unsuitable products on military bases.”
In a legislative hearing earlier this week, lobbyists representing the Montana insurance industry including the Montana Association of Insurance and Financial Advisors (MAIFA), American Council of Life Insurers (ACLI), the American Insurance Association (AIA), America’s Health Insurance Plans (AHIP) and State Farm Insurance testified against HB 542. State Farm, represented by Greg Van Horssen, stated that the bill was too much, too soon. Jacqueline Lenmark, representing AIA and ACLI also opposed the bill stating that the AIA and the ACLI were not confident that the legislation was necessary and urged a “do not pass”.
The new federal law directs the Department of Defense to maintain a list of individuals who have been banned from selling financial services products on military bases, and to share that list with Federal and State securities and insurance regulators.
“This new federal/state system will help track rogue agents who go from base to base to sell unsuitable financial products,” Morrison said. “It will help folks separate the wheat from the chaff so they know they’re dealing with legitimate, properly registered products and agents.”
In addition, the new federal law bans the sale of high-priced, contractual mutual funds. The product has become scarce in the civilian market but was still being offered to service men and women by sales staffs allowed on military bases. Congressional hearings revealed that life insurance sales were made without informing military personnel that life insurance was available to them through the federal government. Under the act, disclosures are required before private life insurance can be sold to members of the military. The issue of suitability was identified as critical since recent probes discovered that insurance products were being sold to military members that didn’t need them – for example life insurance for personnel with no dependents.
“It’s shocking to me that anyone would oppose this – I’m not aware of anybody else opposing this anywhere in America,” said John Oxendine (R), the elected insurance commissioner of Georgia and the leader of the national effort to adopt rules to protect military personnel from fraudulent and unsuitable sales practices. “
“This measure passed with nearly unanimous, bi-partisan support in Congress,” said Rep. Gallik. “I am appalled that our own insurance industry and some legislators in Montana do not want to see our military personnel protected. Our military members are willing to put their lives on the line for us – the least we can do is make sure our men and women in uniform are protected from con artists trying to prey on them.”
“In other states insurers were on the record supporting cooperative efforts that give insurance commissioners the appropriate tools necessary to address dishonest and predatory life insurance sales tactics targeted at our military personnel,” said Morrison. “To suggest that there is no need for these provisions defies logic. We not only have documented abuses in the industry, we have a congressional mandate to implement these measures.”
Source: Montana State Auditor’s Office
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