WASHINGTON, D.C.–Legislation beefing up consumer protections for service members buying life insurance and other products on military bases passed unanimously today by the Senate Banking Committee.
The legislation contains stronger consumer protection provisions than one passed overwhelmingly by the House in June last year.
It is likely to face prompt Senate floor action, possibly before Congress departs for its July 4th recess.
That would set up a conference committee to resolve the differences between the bills passed by the two chambers, hopefully before Congress departs for a month-long August recess.
The bill, S. 418, is also known as the Military Personnel Financial Services Protection Act.
The bill, introduced by Sens. Mike Enzi, R-Wyo., and Hillary Clinton, D-N.Y., institutes a number of reforms designed to help state regulators and the Department of Defense police insurance sales on military bases and eliminate unfair or deceptive sales practices.
Support for the bill was unanimous in the committee, with many members noting that the government has a special obligation to its men and women in uniform.
It also had strong support from insurance industry trade groups.
The Independent Insurance Agents and Brokers of America voiced support for the bill, with its officials saying the group "strongly disapproves of these types of dubious life-insurance sales practices."
It also noted that "these life insurance sales practices have been engaged in by a very limited number of individuals."
Charles E. Symington Jr., IIABA senior vice president for government affairs and federal relations, added, "We have an obligation to protect the brave men and women of our armed forces against a few bad actors who are perpetrating bad-faith sales practices.
"Our armed forces are fighting for our country, and we owe it to them to keep them from being misled. We support this legislation curbing life-insurance sales abuses," Mr. Symington added.
Specifically, the bill would bar the sale of contract mutual funds, which have high fees in their early years and require a lengthy contribution to be valuable to the buyer, and would be unsuitable to someone who is being sent into combat or will be moving often from base to base.
The bill also clarifies that military bases fall under the jurisdiction of the insurance department of the state they are located in, and encourages increased communication between state regulators and military authorities. Additionally, it requires the Department of Defense to maintain a list of individuals who have been barred from a base for unfair sales practices.
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