COLUMBUS — A recent Government Accountability Office (GAO) report stated that the military troops and their families are still often sold inappropriate life insurance products. The report, released on June 29, 2009, showed that while sales of the inappropriate life insurance products have slowed, military personnel and their families are still being targeted for products that aren’t right for them. However, there have been no reports of inappropriate sales activity in Ohio, according to Ohio Department of Insurance officials.
Department Director Mary Jo Hudson is reminding Ohio’s military personnel and their families about the adoption of a rule aimed at protecting the state's active military personnel and their families from unsuitable life insurance products and sales practices. The rule, approved by the Joint Committee for Agency Rule Review (JCARR), became effective Sept. 1, 2007.
"The Department is committed to protecting Ohio's military personnel and their families from predatory sales practices," Director Hudson said. "The standards adopted under this rule give us the tools to take action against those agents who mislead our men and women in uniform into buying unsuitable life insurance products."
The rule was adopted in response to the federal Military Personnel Financial Services Protection Act, which was signed into law by President George W. Bush on Sept. 29, 2006. The federal law enactment was prompted by Congressional findings of "predatory and abusive" sales practices of life insurance products marketed on and off military installations to members of the U.S. Armed Forces.
After years of documented abuse across the country, the federal Act clarified that the state departments of insurance have primary jurisdiction to regulate insurance sales on military installations. It called for the states to work with the secretary of defense to ensure appropriate standards identified in the Act are implemented and a progress report is submitted to Congress by Sept. 29, 2007. Ohio, as well as other states, worked with the National Association of Insurance Commissioners (NAIC) and the secretary of defense to develop a model rule. The Ohio rule (3901-1-08) is based on the NAIC's Military Sales Practices Model Regulation.
The Department of Insurance has adopted the following standards:
- Agents must make a suitability determination to ensure the product meets the insurance needs of the service member and his or her dependents.
- Agents must fully disclose information about themselves, their purpose and the insurance product being offered.
- Agents may not receive any referral or incentive compensation in connection with the sale.
- Agents may not use military personnel in facilitating, soliciting or selling insurance products to service members or their dependents.
- Agents and companies dealing with service members must assure their sales practices are honest, do not mislead, deceive or confuse and that military personnel and their families are treated with the utmost fairness.
Prohibited sales practices in Ohio include:
- Soliciting service members in a group meeting that is mandatory.
- Knowingly making appointments with service members during their normally scheduled duty hours or in places not approved by the installation commander.
- Misleading use of military direct deposit devices for the purchase of life insurance.
- Using military personnel as representatives to sell life insurance to subordinates.
- Misrepresenting life insurance products as being endorsed by the U.S. military.
- Disparaging the life insurance that is already offered by the U.S. military to service members.
- Selling a life insurance product that does not cover a loss or death in the line of duty.
Ohioans who believe an agent is committing fraud or misconduct should call the Department’s Fraud hotline, 1-800-686-1527. For more information on insurance for military personnel please visit the Ohio Department of Insurance web site at www.insurance.ohio.gov or call 1-800-686-1526.