Investigators continue crackdown on insurance scams targeting GIs
January 11, 2005
WASHINGTON — Georgia’s insurance commissioner expects more investigations and sanctions against insurance companies with a military focus in the wake of a Texas firm’s admission of improper insurance sales to troops in basic training.
Last week American-Amicable Life Insurance announced it would pay about $1.3 million to more than 900 Georgia servicemembers sold policies while in training, which is prohibited under Department of Defense policies and Georgia insurance sales regulations.
Company officials blamed a third-party seller — an independent firm selling products from more than one insurance company — for what they called a one-time mistake, but commissioner John W. Oxendine said he thinks the incident points to a larger problem of the industry exploiting military personnel.
“These refunds will in no way be the last step,” he said. “We have an active investigation against six other insurance companies. We believe this does happen all the time.”
One of those other investigations is focused on First Command, who last month agreed to pay an $8 million fine and refund about $4 million to customers given false information and promises about systematic investment plans.
Since the investigations began, several of the companies in question have been barred from business at Fort Benning in Georgia. The Department of Defense has asked all bases to provide details of their solicitation investigations since 2000 as part of a comprehensive review of the industry.
American-Amicable offered life insurance refunds in early 2004 after a similar illegal sales charge at Camp Pendleton, Calif. The company was banned from U.S. Army bases in Europe from 1998 to 2000 for similar soliciting violations.
Spokesman Mark Palmer said that after the latest charges, American-Amicable hired Carl Ross, the retired civilian chief of staff for training at the Great Lakes Naval Training Center, to help revamp training and marketing policies, to ensure similar problems don’t appear in the future.
He added that American-Amicable has ended its contracts with all of the third-party sellers involved in the improper sales.
The third-party seller involved in the Fort Benning case was contacted for comment, but did not respond.
Oxendine said he thinks Georgia’s investigations are just the start of what he hopes will be a nationwide crackdown on unscrupulous insurance and investment firms.
“Ripping off soldiers has been happening since the Middle Ages, but it appears at times of war it gets more active,” he said. “But we haven’t really heard about it until recently.
“The military has taken care of everything (these troops) need, and for them to go outside that structure to complain is against what they’ve been taught.”
Troops who bought the American-Amicable policies while training in Georgia will have 180 days to request a refund, but those stationed outside the United States won’t have that timetable start until they return. All should be receiving notification by mail in the coming weeks.
For more information, call (800) 656-2298.