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FOR IMMEDIATE RELEASE NAIC ADOPTS MODEL REGULATION ON MILITARY SALES SAN FRANCISCO (June 4, 2007) — The National Association of Insurance Commissioners (NAIC) today adopted the Military Sales Practices Model Regulation that will ensure members of the U.S. military are offered suitable insurance products. The NAIC adopted the Military Sales Practices Model Regulation as a result of a mandate from Congress to improve the quality of life insurance products. The Model creates standards for products specifically designed to meet the particular needs of members of the Armed Forces. The Model makes actionable certain acts and practices that, until now, had not specifically been declared to be false, misleading, deceptive or unfair under state trade practices statutes. Many of the practices identified in the Model Regulation incorporate Department of Defense solicitation rules. For example, the new regulation makes it a deceptive trade practice to solicit in barracks, day rooms and other restricted areas. “The adoption of this Model Regulation is a crucial step in making sure the members of the military are protected from abusive sales practices and provided the highest quality insurance products,” said Georgia Insurance Commissioner John Oxendine. The Model Regulation also addresses Congressional findings 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. Responding to 30 years of documented abuse regarding the sale of life insurance to members of the military, Congress passed and President George W. Bush signed on Sept. 29, 2006, the Military Personnel Financial Services Protection Act, Pub. L. No. 109-290 (2006) (the “Federal Act”). As part of this Act, Congress required that the states collectively work with the Secretary of Defense to ensure implementation of appropriate standards to protect members of the Armed Forces from dishonest and predatory insurance sales practices while on a military installation. Further, each state must report to Congress by Sept. 29, 2007, on the progress made regarding its adoption of the standards collectively developed. “The states worked closely with the Department of Defense when developing the model regulation,” said Texas Insurance Commissioner Mike Geeslin. “We look forward to continuing this collaborative effort."
About the NAIC Headquartered in Kansas City, Missouri, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and the five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit NAIC on the Web at: http://www.naic.org/press_home.htm.
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©2007 National Association of Insurance Commissioners. All rights reserved. |
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