Military Sales Working Group - (EX) - NAIC

  • 2005-3, NAIC Proceedings - (2005 0922) -  Life Insurance and Annuities (A) Committee
    • (p115) - Commissioner Voss said an issue has come up to the Market Analysis (D) Working Group about some products being offered that are a term life insurance policy with an annuity side fund.
      • The issue first arose in sales on military bases, but it appears the products are being sold elsewhere.
      • She requested that the A Committee review these products. 
  • 1976 - SOA - Economic Role of Life Insurance, Society of Actuaries - 16p
    • Anna Rappaport, (2023 - The Actuarial Foundation, Emeritus Trustee),
      • Everybody has been talking a lot about a paper by James Anderson on the so-called universal life insurance policy which was an annuity-term combination.
      • So you have to bring the annuity into this. 
        • [paper = 1975 (originally) - SOA - The Universal Life Insurance Policy, James C.H. Anderson, Society of Actuaries - 10p]
  • 2005-3, NAIC Proceedings - (2005 1010) - LIAC
    • p121 - Review life insurance sold with a side fund to recommend a position on the products being offered in the marketplace. Essential 
  • 2005-4, NAIC Proceedings - (2005 1205)
    • (p126) - 2. Update on State Consumer Education Materials and NAIC's Consumer Information Source
      • reviewed the enhancements made to the consumer pages on the NAIC Web site. These enhancements include ... a specific link for military personnel.
    • (p804) - In light of the issues related to the improper sale of life insurance products to military personnel and the need to enhance the tracking of these issues, the NAIC has implemented a new complaint code to track consumer complaints impacting military personnel.
  • 2006-1, NAIC Proceeding, (2006 0305) - OPENING SESSION, 2006 Spring National Meeting, National Association of Insurance Commissioners
    • (p3) - President Alessandro luppa - Our ongoing effort on military sales is another example of how multistate collaboration can work to benefit consumers and policyholders and I do want to recognize the leadership of commissioners Oxendine and Geeslin on this important issue.
  • 2006-4, NAIC Proceedings
    • (p7) - 14. Adopted the Resolution for Military Life Sales Resolution and charge to create an Executive (EX) Committee Working Group.
  • 2006-4, NAIC Proceedings
    • (p47) - 14. Consider Adoption of the Resolution for Military Life Sales Resolution and Charge to Create an Executive (EX) Committee Working Group.
      • Commissioner Iuppa made a motion to adopt the Resolution for Military Life Sales Resolution and charge to create an Executive (EX) Committee Working Group (Attachment Eight).
      • The motion was seconded and passed.
  • 2006-4, NAIC Proceedings - Market Analysis (D) Working Group - Dec. 12. 2006
    • 7. Through the hard work and efforts of various involved states, a 48 state/territory settlement was reached with a company, whose target audience was primarily entry level military service members, and a Memorandum of Understanding (MOU)
      agreement was signed with the Department of Defense (DoD).
    • 8. Another examination involving military sales resulted in a multistate settlement with a company, culminating in a substantial amount of refunds to customers.
  • 2006-4, NAIC Proceedings, (2006 1105), Market Regulation and Consumer Affairs (D) Committee
    • (p1064) - Mr. Leifer questioned whether this Working Group would address any of the issues related to the sales and marketing of life insurance to military personnel.
    • Commissioner Poolman responded there would likely be a new Executive Committee Working Group appointed to discuss these issues. 
  • 2006-4, NAIC Proceedings, (2006 1210)
    • (p509-510) - Declaration on Life Insurance Sales to Members of the Armed Forces: A Resolution to Establish a New Executive Level Working Group 

Executive (EX) Committee

Military Sales (EX) Working Group

John Oxendine, Co-Chair
Mike Geeslin, Co-Chair
Kevin McCarty
Michael McRaith
Susan Voss
Nonnie Burnes
Eric Dinallo
Jim Long
Jim Poolman
Kim Holland
Alfred W. Gross
Staff Support: Timothy D. Mullen

  • 2008  - Adam Hamm, North Dakota

Georgia
Texas
Florida
Illinois
Iowa
Massachusetts
New York
North Carolina
North Dakota
Oklahoma
Virginia

 

  • 2007-1, NAIC Proceedings, (2007 0309-12),
    • (p) - Synopsis of the NAIC Committee, Subcommittee and Task Force Meetings, 2007 Spring National Meeting
      • 9. Adopted reports for the Executive (EX) Committee Working Groups and Task Forces, which include... Military Sales;
    • (p) - Military Sales (EX) Working Group
      Commissioner Oxendine reported the Military Sales (EX) Working Group was appointed during the NAIC Winter National Meeting. This group is co-chaired by Georgia and Texas, On Sept. 29, 2006, the President of the United States signed into law S. 418, the "Military Personnel Financial Services Protection Act," which is intended to protect members of the Armed Forces from unscrupulous practices regarding sales of insurance, financial, and investment products. In response to the passage of this Act, the Working Group is focusing on the following: 1) State authority to promulgate regulations as may be necessary to protect military personnel to carry out the provisions of the Military Personnel Financial Services Protection Act. The review and consideration of this legislation is paramount. The adoption of enabling legislation is not necessary if a state's code already grants such authority under the Unfair Trade Practices Act; 2) The development of a model regulation defining what sales practices involving military personnel are considered false, misleading or deceptive. The practices being incorporated into the regulation are based upon the false, misleading and deceptive practices that were discovered during some of the multi-state actions against insurance companies marketing to military personnel; 3) A report on the quality and sale of life insurance products to members of the Armed Forces. This report includes the following broad topics: (1) background of issues noted by regulators, (2) examples/illustrations of problems and (3) summary of the NAIC solutions to address issues. This report is due to Congress by March 29, 2007; 4) A state system to collectively receive and share reports of disciplinary actions taken against persons selling life insurance products on military installations. The NAIC staff is exploring the best way in which this system might be implemented and would provide a list of options to the working group within the next month.
  • 2007-2V1, NAIC Proceedings - xv, 4,
    • p8 - 11. Adopted the report of the Military Sales (EX) Working Group, which included adoption of the Military Sales Practices Model Regulation
    • p147-150 - Project History: Military Sales Practices Model Regulation, Attachment Five - Joint Executive (EX) Committee/Plenary
    • p151-159 - 
    • p182-183 - Military Sales Practices Model Regulation, Request for Model Law Development (Attachment One) 
  • 2007-2, NAIC Proceedings -
    • 13. Consider Adoption of the Oral Report of the Military Sales (EX) Working Group
      Commissioner Oxendine said the Military Sales (EX) Working Group:
      Finalized the report, "Life Insurance Sales to Members of the Armed Forces," on March 29, 2007.
      Circulated a revised draft of the Military Sales Practices Model Regulation for public comment on March 29, 2007, in conjunction with the submission of the NAIC's report to Congress. Based upon the comments received on this draft, the working group issued a revised draft of the model regulation on April 19, 2007 and held a conference call on April 19, 2007 with all interested parties.
    • Based on the review of the comments and dialogue with all interested parties, the working group circulated a revised draft of
      the Military Sales Practices Model Regulation for comment on May 11, 2007, The working then held an open call with all
      interested parties on May 24, 2007, and adopted the Military Sales Practices Model Regulation,
      In addition, to its work on the model regulation, the working group began discussing how states can collectively implement a
      system to receive reports generated by insurers, regarding any disciplinary action taken by any Federal or State government
      entity and any significant disciplinary action taken by the insurer with respect to sales or solicitations of life insurance
      products on military installations, and disseminate such information to all other States and the Secretary of Defense,
      Commissioner Oxendine made a motion to adopt the Military Sales (EX) Working Group report. The motion was seconded
      and passed.
      14. Consider Adoption of the Military Sales Practices Model Regulation Commissioner Oxendine made a motion to adopt the Military Sales Practices Model Regulation (Attachment Five). The motion was seconded by Commissioner Holland and passed unanimously
  • 2007-2, NAIC Proceedings, 
    • (p180) - 2. Military Sales Practices Model Regulation Commissioner Oxendine gave an overview of the Request for Model Law Development (Attachment One). Commissioner Poolman made a motion that Military Sales Practices Model Regulation be approved as a model. The motion was seconded by Director Hall and passed unanimously.
    • (p182) - Military Sales Practices Model Regulation, Request for Model Law Development (Attachment One) 
  • 2007-3, NAIC Proceedings, (2007, p36) - 14. Hear Report of the Military Sales Practices Model Regulation

14. Hear Report of the Military Sales Practices Model Regulation.

Margaret Whitten (GA) reported that on June 4, 2007, four months after the circulation of the first exposure draft, the NAIC unanimously adopted the Military Sales Practices Model Regulation (the Model Regulation). The Model Regulation makes actionable certain acts and practices which until now have not specifically been declared to be false, misleading, deceptive or unfair under state trade practices statutes. Many of the practices identified incorporate Department of Defense (DoD) solicitation rules. For example, the Model Regulation, by tracking DoD regulations, makes it a deceptive trade practice to solicit in barracks, day rooms and other restricted areas.

The Model Regulation also addresses Congressional concerns set out in Section 11 of the Act regarding suitability and product standards. In this regard, the Model Regulation makes it a deceptive or unfair trade practice to recommend the purchase of any life insurance product which includes a "side fund" to junior enlisted service members in pay grades E-4 and below, unless the insurer has reasonable grounds for believing that the life insurance portion of the product, standing alone, is suitable.

As of Sept. 28, 2007, 15 states with a combined total of 466,075 active duty military personnel have adopted the Model Regulation. By the end of calendar year 2007, another 15 states and the District of Columbia are expected to do so since they have already initiated rule-making proceedings, bringing the combined total for the year to 31 jurisdictions representing 794,641 active duty military personnel or 67.6% of CONUS (Continental United States) components.

An additional seven states and Puerto Rico plan to begin rulemaking in either late September or October and have indicated that the Model Regulation will be adopted and in effect by the end of the first quarter 2008. The NAIC estimates that by March 31, 2008, a total of 39 jurisdictions will have adopted the Model Regulation representing 1,077,023 active duty military personnel or 91.6% of CONUS components. The Model Regulation is under active review in seven states. Another six states have indicated to the NAIC that they either require legislative authority or approval in order to adopt the Model Regulation

  • 2007-3, NAIC Proceedings (2007 0930, p45-46) - 1. Adopted Report of the Military Sales (EX) Working Group

1. Adopted Report of the Military Sales (EX) Working Group

Margaret Witten (GA) stated on Sept. 29, 2006, the President of the United States signed into law S. 418, the "Military Personnel Financial Services Protection Act" (the "Act") which is intended to protect members of the Armed Forces from predatory life insurance sales. During the NAIC 2006 Winter National Meeting the NAIC membership appointed a new Military Sales (EX) Working Group to assist state insurance regulators in achieving applicable directives set forth in the Act.

The following charges are contained in the Act:
• The NAIC should, after consultation with the Secretary of Defense, conduct a study and submit a report to the Senate Banking and House Financial Services Committees not later than March 29, 2007, on ways of improving the quality and sale of life insurance products sold on U.S. military installations and the extent to which life insurance products marketed to military personnel complies with applicable provisions of State law.
• States must collectively work with the Secretary of Defense to implement appropriate military personnel protection standards regarding dishonest and predatory insurance sales practices on U.S. military installations, including those abroad. Each state must identify its role in promoting these standards in a uniform manner not later than Sept. 29, 2007.
• The NAIC, after consulting the Secretary of Defense, should conduct a study to determine the extent to which States have developed and implemented these uniform standards and report the results to the Senate Banking and House Financial Services Committees not later than Sept. 29, 2007.
• Not later than Sept. 29, 2007, States should collectively implement a system to receive the reports generated by insurers,regarding any disciplinary action taken by any Federal or State government entity and any significant disciplinary action taken by the insurer with respect to sales or solicitations of life insurance products on military installations, and disseminate such information to all other States and the Secretary of Defense.
• The senior representatives of the Secretary of Defense, the SEC, and the NAIC should meet at least twice a year to coordinate their activities to implement S. 418 and monitor enforcement of the relevant regulations relating to the sales of financial products on U.S. military installations.

The NAIC submitted its first report to Congress on March 29, 2007. This report focused on ways of improving the quality and sale of life insurance products sold on U.S. military installations and the extent to which life insurance products marketed to military personnel comply with applicable provisions of State laws.
During the NAIC Summer National Meeting, the NAIC adopted the Military Sales Practices Model Regulation.

The model regulation makes actionable certain acts and practices. Many of the practices identified incorporate Department of Defense (DoD) solicitation rules. For example, the Model Regulation, tracking DoD regulations, makes it a deceptive trade practice to solicit in barracks, day rooms and other restricted areas. The Model Regulation also addresses Congressional concerns regarding suitability and product standards. In this regard, the Model Regulation makes it a deceptive or unfair trade practice to recommend the purchase of any life insurance product which includes a side fund to  junior enlisted service members in pay grades E- 4 and below, unless the insurer has reasonable grounds for believing that the life insurance portion of the product, standing alone, is suitable.

On Sept. 28, the NAIC submitted its second report to Congress. This report satisfies the Congressional mandate for an update on how states have collectively worked with the Secretary of Defense to implement appropriate military personnel protection standards regarding dishonest and predatory insurance sales practices on U.S. military installations, including those abroad.

On Sept. 25, the NAIC established the Web-based Military Sales Online Reporting System (MSORS). Through this system, insurers have a uniform set of data fields and a centralized point to report disciplinary actions to all state insurance departments. MSORS may also used to receive reports from federal government entities and state entities other than insurance departments. As part of this effort, the NAIC's Market Information Systems were updated with the appropriate
codes to track inappropriate sales activities targeted to military personnel.

While not mandated by the Federal Act, the NAIC has worked with the DoD to develop a "Red Flag" advisory to alert members of the Armed Forces to sales practices typically used by agents selling a life insurance policy as an investment or savings plan. The states will forward the "Red Flag" advisory to military installations for publication and distribution in an effort to encourage reporting of predatory and deceptive sales practices to both the installation and the appropriate state insurance regulator.

The Military Sales (EX) Working Group will continue to coordinate the ongoing multistate examinations involving inappropriate sales. In addition, the Working Group will continue to meet with the senior representatives of the Secretary of Defense and the U.S. Securities and Exchange Commission (SEC), at least twice a year, to coordinate their activities and monitor the enforcement of the relevant regulations relating to the sales of financial products on U.S. military installations.
Commissioner Sevigny made a motion to adopt the report of the Military Sales (EX) Working Group. The motion was seconded by Commissioner Praeger and passed.

  • 2007-4, NAIC Proceedings, (2007 0929) - Legislative Liaison Meeting
    • (p2155) - Commissioner Mike Geeslin updated the group on the activities surrounding the NAIC Military Sales Practices Model Regulation. The NAIC submitted its  most recent report on military sales to Congress on Sept. 28, 2007, announcing that 15 states have currently adopted the model regulation and another 15 will adopt the model regulation within the next three months.
  • 2007-4, NAIC Proceedings, (2007 1203) - Executive (EX) Committee -
    • (p<4-2 - 4-3>) - Commissioner John Oxendine (GA) reported that on Sept. 29, 2006, the President of the United States signed into law S. 418, the Military Personnel Financial Services Protection Act, which is intended to protect members of the Armed Forces.
    • During the NAIC 2006 Winter National Meeting, the NAIC membership appointed a new Military Sales (EX) Working Group to assist state insurance regulators in achieving applicable directives set forth in the Military Personnel Financial Services Protection Act. The following charges are contained in the Military Personnel Financial Services Protection Act:
  1. The NAIC should, after consultation with the Secretary of Defense, conduct a study and submit a report to the Senate Banking and House Financial Services committees no later than March 29, 2007, on ways of improving the quality and sale of life insurance products sold on U.S. military installations and the extent to which life insurance products marketed to military personnel comply with applicable provisions of state law.
  2. States must collectively work with the Secretary of Defense to implement appropriate military personnel protection standards regarding dishonest and predatory insurance sales practices on U.S. military installations, including those abroad. Each state must identify its role in promoting these standards in a uniform manner no later than Sept. 29, 2007.
  3. The NAIC, after consulting the Secretary of Defense, should conduct a study to determine the extent to which states have developed and implemented these uniform standards and report the results to the Senate Banking and House Financial Services committees no later than Sept. 29, 2007.
  4. No later than Sept. 29, 2007, states should collectively implement a system to receive reports generated by insurers regarding any disciplinary action taken by any federal or state government entity and any significant disciplinary action taken by the insurer with respect to sales or solicitations of life insurance products on military installations,
    and disseminate such information to all other states and the Secretary of Defense.
  5.  The senior representatives of the Secretary of Defense, the Securities & Exchange Commission (SEC), and the NAIC should meet at least twice a year to coordinate their activities to implement S. 418 and monitor enforcement of the relevant regulations relating to the sales of financial products on U.S. military installations.

The NAIC submitted its first report to Congress March 29, 2007. This report focused on ways of improving the quality and sale of life insurance products sold on U.S. military installations and the extent to which life insurance products marketed to military personnel comply with applicable provisions of state laws. On Sept. 28, the NAIC submitted its second report to Congress. This report satisfied the congressional mandate for an update on how states have collectively worked with theSecretary of Defense to implement appropriate military personnel protection standards regarding dishonest and predatory insurance sales practices on U.S. military installations, including those abroad.
During the NAIC Summer National Meeting, the NAIC adopted the Military Sales Practices Model Regulation. The model regulation makes actionable certain acts and practices that until now have not been declared to be false, misleading, deceptive or unfair under state trade practices statutes. Many of the practices identified incorporate Department of Defense (DoD) solicitation rules. For example, the Model Regulation tracking DoD regulations makes it a deceptive trade practice to solicit in barracks, day rooms and other restricted areas. The Model Regulation also addresses congressional concerns regarding suitability and product standards. In this regard, the Model Regulation makes it a deceptive or unfair trade practice to recommend the purchase of any life insurance product that includes a side fund to junior enlisted service members in pay grades E-4 and below, unless the insurer has reasonable grounds for believing that the life insurance portion of the product, standing alone, is suitable.

The Working Group is finalizing a model bulletin directing insurers to comply with the required reporting of disciplinary actions pursuant to the Military Personnel Financial Services Protection Act, On Sept, 25, the NAIC established the Web based Military Sales Online Reporting System (MSORS). Through this system, insurers have a uniform set of data fields and a centralized point to report disciplinary actions to all state insurance departments. MSORS may also be used to receive reports from federal government entities and state entities other than insurance departments. As part of this effort, the NAIC's Market Information Systems were updated with the appropriate codes to track inappropriate sales activities targeted to military personnel.
The Working Group continues to coordinate the ongoing multi-state examinations involving inappropriate sales. In addition, the Working Group will continue to work with the senior representatives of the Secretary of Defense and the SEC at least twice a year to coordinate their activities and monitor the enforcement of the relevant regulations relating to the sales of financial products on U.S. military installations.

While it is not mandated by the federal act, the NAIC has worked with the Department of Defense to develop a "Red Flag"advisory to alert members of the Armed Forces to sales practices typically used by agents selling a life insurance policy as an investment or savings plan. The Working Group continues to work with DoD to obtain the appropriate contact information for the military bases so the "Red Flag" advisory can be properly provided to military installations for publication and distribution.

Commissioner McCarty made a motion to adopt the Military Sales (EX) Working Group report. The motion was seconded by Director Hall and passed unanimously.

  • 2008-1, NAIC Proceedings, (p<3-11>, 2008 0331) - Plenary -
    • (p) - 16, Report of the Military Sales Practices Model Regulation
      • Justin Durrance (GA) reported on June 4, 2007, four months after the circulation of the first exposure draft, the NAIC unanimously adopted the Military Sales Practices Model Regulation (the Model Regulation). The Model Regulation makes actionable certain acts and practices which until now have not specifically been declared to be false, misleading, deceptive or unfair under state trade practices statutes. Many of the practices identified incorporate Department of Defense (DoD) solicitation rules. For example, the Model Regulation, by tracking DoD regulations, makes it a deceptive trade practice to solicit in barracks, day rooms and other restricted areas.
        The Model Regulation also addresses Congressional concerns set out in Section 11 of the Act regarding suitability and product standards. In this regard, the Model Regulation makes it a deceptive or unfair trade practice to recommend the purchase of any life insurance product which includes a "side fund" to junior enlisted service members in pay grades E-4 and below, unless the insurer has reasonable grounds for believing that the life insurance portion of the product, standing alone, is suitable.
        As of the NAIC Fall National Meeting, 15 states had adopted the Model Regulation. Since the NAIC Fall National Meeting, another 10 states have adopted the model regulation. As of Nov. 29, 2007, 25 states with a combined total of 773,192 active duty military personnel have adopted the Model Regulation. Within the next three months, another 13 states and the District of Columbia are expected to do so since they have already initiated rule-making proceedings. This increases the total number
        of jurisdictions to 39, representing 1,081,973 active duty military personnel or 92% of CONUS (Continental United States) components.
        An additional 13 states and Puerto Rico continue to pursue the adoption of the regulations. Six of these states have indicated
    • (p<13-18>) - Information Systems (H) Task Force
      • Business Issues: Two new RIRS reason codes and one SAD activity code were added to support the Military Sales initiative. The new RIRS reasons are inappropriate sales or solicitation to a military service member & inappropriate sales or solicitation on a military installation. The new SAD activity is the sales or solicitation to a military service member.
  • 2008-2, NAIC Proceedings - (2008 0601) - Executive (EX) Committee
    • (p<4-2>) - 1. Adopted Report of Military Sales (EX) Working Group
    • Ms, Witten reported that as of June 1, 40 jurisdictions have adopted the Military Sales Practices Model Regulation, representing 1,063,546 active military personnel or 90% of CONUS (Continental United States) components. Within the next three months, three additional states are expected to adopt the model regulation. An additional nine states continue to pursue the adoption of the regulation, with six of these states requiring legislative authority or approval. Ms. Witten indicated that the sales practices, which the model regulation was intended to prohibit, are still ongoing issues in the marketplace, and the Military Sales (EX) Working Group continues to coordinate the ongoing multistate examinations involving inappropriate sales. In addition, the Working Group will continue to meet with senior representatives of the Secretary of Defense and the Securities and Exchange Commission (SEC) at least twice a year to coordinate their activities and monitor the enforcement of
      the relevant regulations relating to the sales of financial products on U.S. military installations. Ms. Witten reported that
      while not mandated by the Military Personnel Financial Services Protection Act the NAIC has worked with the Department of Defense to develop a "Red Flag" advisory to alert members of the Armed Forces to sales practices typically used by agents selling a life insurance policy as an investment or savings plan. States are encouraged to continue working with the base commanders of military installations in the states to coordinate the release of this advisory. Commissioner Bell made a motion to receive the report of the Military Sales (EX) Working Group. The motion was seconded by Commissioner Sevigny and passed.
  • 2008-3, NAIC Proceedings - (p<4-2), 2008 0923) -  Executive (EX) Committee
    • 1. Consider Adoption of the Report of the Military Sales (EX) Working Group
    • Ms, Witten reported that as of Sept. 1, 42 jurisdictions had adopted the NAIC's Military Sales Practices Model Regulation, representing 1,079,626 active military personnel or 92% of the continental United States, with the remainig jurisdictions continuing to pursue its adoption, Ms. Witten reported that the Military Sales Online Reporting System (MSORS) provides insurers with a uniform set of data fields and a centralized location to report disciplinary actions to all state insurance departments. MSORS can also receive reports from federal and state government agencies, Ms. Witten indicated that states are encouraged to use the Working Group's bulletin template to direct insurers to comply with the required reporting of disciplinary actions pursuant to the Military Personnel Financial Services Protection Act. Ms. Witten noted that the NAIC worked with the U.S. Department of Defense to develop a "Red Flag" advisory to alert members of the Armed Forces to sales practices typically used by agents selling a life insurance policy as an investment or savings plan and encouraged states to continue working with base commanders to have this advisory issued. Ms, Witten stated that the Working Group continues to monitor the marketplace for inappropriate sales activities to the military and to work with the U.S. Department of Defense and the U.S. Securities and Exchange Commission (SEC) to coordinate and monitor the enforcement of the relevant regulations relating to the sales of financial products on U.S. military installations. Commissioner Long made a motion to adopt the report of the Military Sales (EX) Working Group. The motion was seconded by Commissioner Holland and passed.
  • 2008-3, NAIC Proceedings, (p<13-16>, 2008 0928) - Information Systems (H) Task Force
    • Business Issues:
      Currently, the web services are only being utilized internally by the Exam Tracking System. Two new MRS reason codes and one SAD activity code were added to support the Military Sales initiative. The new RIRS reasons are inappropriate sales or solicitation to a military service member & inappropriate sales or solicitation on a military installation. The new SAD activity is the sales or solicitation to a military service member.
  • 2008-4, NAIC Proceedings, (2008 1206) - Executive (EX) Committee
    • (p<4-4 - 4-5> - 12. Consider Adoption of the Military Sales (EX) Working Group Mr. Wagner reported that as of Dec. 3, 46 jurisdictions had adopted the NAIC's Military Sales Model Regulation, representing 1,169,155 active military personnel. The additional jurisdictions continue to pursue its adoption. In 2006, more than 40 state insurance departments collaborated through the NAIC to sign a multi-state regulatory settlement with three Texas-based life insurance companies involved in the improper sale of insurance and investment products to U.S. military service members. The regulatory settlement required American-Amicable Life Insurance company of Texas and its two affiliates, Pioneer American Insurance Company and Pioneer Security Life Insurance Company, to provide immediate cash refunds and increased policy benefits totaling $70 million to their approximately 92,000 policyholders. Because of the high rate of relocation of military service members, approximately 14,405 have not been located. The NAIC has established a Web page in order to assist individuals who believe they may be eligible for restitution pursuant to the multi-state settlement agreement. Through this Web page individuals will be able to conduct an online search using their last name and first name to identify if they are afforded restitution and the possible amount of restitution.
    • <p4-5) - The Working Group continues to monitor the marketplace for inappropriate sales activities to the military. In addition, the Working Group continues to work with the senior representatives of the Secretary of Defense and the SEC, at least twice a year, to coordinate their activities and monitor the enforcement of the relevant regulations relating to the sales of financial products on U.S. military installations.
      States are reminded that there is a Web- based Military Sales Online Reporting System (MSORS) on the NAIC Web site.
      Through this system, insurers have a uniform set of data fields and a centralized point to report disciplinary actions to all state insurance departments. MSORS may also be used to receive reports from federal government entities and state entities other
      than insurance departments. As part of this effort, the Working Group finalized a bulletin template directing insurers to comply with the required reporting of disciplinary actions pursuant to the Military Personnel Financial Services Protection Act. States are encouraged to issue this bulletin. Commissioner Bowman made a motion to adopt the report of the Military Sales (EX) Working Group. The motion was seconded by Director Hall and passed.
  • 2008-4, NAIC Proceedings, (2008 1208) - Market Regulation and Consumer Affairs (D) Committee
    • (<p9-44>) - Mr. Ramge mentioned that relevant sections of the Market Regulation Handbook may need to be updated with regard to ...military sales.
  • 2007-4, NAIC Proceedings, (p<3-10>)

19. Report of the Military Sales Practices Model Regulation

Commissioner Oxendine reported that on June 4, 2007, four months after the circulation of the first exposure draft, the NAIC unanimously adopted the Military Sales Practices Model Regulation (the Model Regulation). The Model Regulation makes actionable certain acts and practices that until now have not specifically been declared to be false, misleading, deceptive or unfair under state trade practices statutes.1 Many of the practices identified incorporate Department of Defense (DoD) solicitation rules. For example, the Model Regulation, by tracking DoD regulations, makes it a deceptive trade practice to solicit in barracks, day rooms and other restricted areas. The Model Regulation also addresses congressional concerns set out in Section 11 of the Act regarding suitability and product standards. In this regard, the Model Regulation makes it a deceptive or unfair trade practice to recommend the purchase of any life insurance product that includes a "side fund" to junior enlisted service members in pay grades E-4 and
below, unless the insurer has reasonable grounds for believing that the life insurance portion of the product, standing alone, is suitable.

As of the NAIC Fall National Meeting, 15 states had adopted the Model Regulation. Since the NAIC Fall National Meeting, another 10 states have adopted the model regulation. As of Nov. 29, 2007, 25 states with a combined total of 773,192 active duty military personnel have adopted the Model Regulation. Within the next three months, another 13 states and the District of Columbia are expected to do so, as they have already initiated rule-making proceedings. This increases the total number of jurisdictions to 39, representing 1,081,973 active-duty military personnel or 92% of CONUS (Continental United States) components.2
An additional 13 states and Puerto Rico continue to pursue the adoption of the regulations. Six of these states have indicated to the NAIC that they require either legislative authority or approval in order to adopt the Model Regulation.

1 This is not to say that these practices could not be administratively or judicially determined to be false, misleading, deceptive or unfair.

2 Includes Hawaii, Alaska and Puerto Rico.