OIR Proposed Rule Hearing: Military Sales Practices

On August 2, 2007, this office attended a public hearing at the Office of Insurance Regulation (“OIR”) on Proposed Rule 690-142.200 entitled “Military Sales Practices.” 

The purpose of the Rule is to protect active duty military servicemen and servicewomen from dishonest and predatory sales practice by identifying such practices as being false, misleading, deceptive or unfair.   The Rule applies to the solicitation or sale of any life insurance or annuity product to active duty military personnel.

The comments at the hearing mainly concerned conforming the Florida Rule to the NAIC Rule regarding its Model Regulation on Military Sales.  The NAIC’s model creates standards for products specifically designed to meet the particular needs of military personnel. 

For example, the NAIC Model Regulation makes it a deceptive 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 product is suitable.  Also, it is considered deceptive to solicit in barracks, day rooms and other restricted areas.  Representatives from the American Council of Life Insurers and the Florida Association of Insurance Financial Advisors expressed a concern that it is an unreasonable expectation to believe that an agent is going to be able to recognize certain military personnel as active duty or reservists. 

Representatives from the OIR noted that they would take the concerns under advisement but did not indicate whether or not they would amend the Proposed Rule. 

The record will remain open for an additional 10 days to allow for written comments.  If the Proposed Rule is not amended, it will go before the Financial Services Commission for approval. 

A copy of the Proposed Rule and the OIR agenda is attached for your review.

To read the NAIC press release on its adoption of the Model Regulation on Military Sales, click here.  To view a comprehenisive NAIC reference guide to insurance issues affecting military personnel, click here.

Please feel free to contact this office should you require additional information regarding this matter.