Military Sales (EX) Working Group
Executive (EX) Committee

Resolution to Establish Working Group

Background
On September 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 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.
   
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 not later than September 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 not later than September 29, 2007.
   
4. Not later than September 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.
5. 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.

Military Sales Educational Brochure
Early in the process, the NAIC developed a Military Sales Educational Brochure with state contact numbers for military personnel. This brochure has been circulated to state insurance departments and is available on the NAIC Web site at the following Web link:

Military Sales Educational Brochure

Model Bulletin
On September 25, 2007, 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 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. This template has been circulated to the states and states are encouraged to issue this bulletin. To date, no data has been reported to the states through this system.

Educational Outreach
While 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.

Model Regulation Adoption
As of the Dec. 1, 2007, 30 jurisdictions, representing 804,196 active duty military personnel or 68% of CONUS (Continental United States) components, had adopted the model regulation. As of June 1, 2008, 40 jurisdictions have adopted the model regulation, representing 1,063,546 active military personnel or 90% of CONUS (Continental United States) components. As of Sept. 1, 2008 42 jurisdictions have adopted the model regulation, representing 1,079,626 active military personnel or 92% of CONUS. As of Dec. 1, 2008, 46 jurisdictions have adopted the model regulation, representing 1,169,155 active military personnel or 99% of CONUS. As of Mar. 1, 2009, 47 jurisdictions have adopted the model regulation, representing 1,165,110 or 99% of CONUS. The additional jurisdictions continue to pursue the adoption of the regulation.

Ongoing Efforts
The Military Sales (EX) 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.