Study Examines Sales to Soldiers

The New York Times
July 1, 2005

An extensive study by the Government Accountability Office, delivered to members of Congress yesterday, confirmed that Pentagon rules intended to protect service members from high-pressure or deceptive life insurance sales have been repeatedly violated in recent years.

The study also concluded that the Defense Department failed to effectively address those violations, and it warned that new rules proposed by the Pentagon this summer do not go far enough to repair the department's weaknesses.

The yearlong G.A.O. investigation confirmed several incidents, first reported in The New York Times last July, involving abusive insurance sales practices on military bases, including Fort Benning in Georgia and Camp Pendleton in California. It also found many problems in the department's handling of paperwork that allows premiums to be automatically deducted from paychecks.

But the investigators said that they could not substantiate the complaints from the insurance industry that prompted Congress to order the inquiry in the spring of 2004.

At that time, some small military insurers and their sales agents complained to Congress that commanding officers were preventing soldiers at several bases from buying supplemental life insurance before they were deployed to Iraq and other dangerous places.

The report cited more than two dozen specific instances over a three-year period in which insurance agents had been barred from military bases for violating Defense Department rules.

And more than a third of the military financial counselors it surveyed reported that misleading sales presentations had occurred ''occasionally or routinely'' on their bases in recent years, the report noted.

Moreover, the G.A.O. investigators found that some payroll offices on military bases were allowing insurance agents, rather than the service members themselves, to submit the paperwork that allowed insurance premiums to be deducted automatically from military paychecks -- a practice that the investigators called a clear violation of Pentagon rules.

In a rebuttal to the criticisms that was included with the report, the Pentagon argued that the G.A.O. should have emphasized more strongly that it had found no support for industry accusations that officers were preventing soldiers from buying life insurance.

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