Some Georgia Agents Barred From Military Base

In commenting on the disciplinary action, a staff official of American Amicable in Waco, Texas, noted that the company is one of 17 insurers throughout the country notified of the pending action against Associates Financial. The companies are located in Texas, Wisconsin, Ohio and Colorado, according to the document.

The department said in the document that it wants to revoke the license for actions by its agents in sale of insurance products at either Fort Benning or Fort Stewart, Ga.

"The agents in the course of offering and marketing the American Amicable insurance products for sale referred to the same only in the most general of terms as a savings plan or an investment with a set amount of investment and rate of return or in words having similar import and meaning, but did not specifically describe, identify or disclose that the product primarily was an insurance plan," the complaint states.

"At no time did the members of the armed forces solicited by agents for the Respondent clearly understand that they were being sold a product of insurance, as opposed to and distinguished from making a financial investment," the complaint adds, noting, "The members of the armed forces solicited by agents for the respondent were misled or deceived by the statements that were made by the agent(s) regarding the true, but undisclosed nature of the product being sold."

The show cause order by Insurance Commissioner John Oxendine against Associates Financial is the first legal document spelling out allegations against agents and carriers of insurance products sold to military personnel since a firestorm was created by July New York Times articles raising concerns about the suitability of insurance products sold to military personnel on or near their bases.

The controversy generated a bill passed by the House of Representatives last month, 396-2, that clarifies that sale of insurance on military bases is subject to state regulation and mandates substantive additional disclosures about the product to the member of the armed forces to whom the product is being marketed. It also bans sale of contract mutual funds on military bases, either in the U.S. or overseas, and it requires state insurance regulators and the Department of Defense to maintain a list of agents banned from military bases and to share that information with base commanders.

The controversy has also prompted members of Congress to ask the Government Accountability Office to study the issue, and the U.S. Attorneys Office in Philadelphia to subpoena certain records regarding these sales from American Amicable.

The National Association of Insurance Commissioners has also created an informal working group of commissioners to deal with the issue. The working group is headed by Oxendine.

Reproduced from National Underwriter Edition, October 28, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.