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DoD Bars Insurance Company, Charges Deception

By Jim Garamone and Staff Sgt. Alicia Borlik
American Forces Press Service

WASHINGTON, Oct. 6, 1998 – DoD is cracking down on insurers it believes are preying on service members.

"It won't be tolerated," said Stephen Rossetti, DoD's executive director for Morale, Welfare and Recreation, and Resale Activities. DoD, working with the Justice Department, is investigating a number of insurance companies allegedly employing deceptive sales practices on military installations.

DoD recently imposed a three-year worldwide bar on Academy Life Insurance Co. that prohibits it from selling policies on military installations. DoD officials said the company, a major insurance seller to military personnel, used "inherently deceptive and manipulative" sales practices." DoD linked Academy Life with the Non Commissioned Officers Association, a congressionally chartered organization of current and former NCOs.

"Based on the materials that we have reviewed it appears that in the typical case a service member agrees to hear a presentation in his or her home about the benefits of NCOA membership," said Frank Rush, acting assistant secretary of defense for force management policy, in a letter to Academy Life President Tim Stonehocker. "The NCOA counselor then markets Academy Life insurance products in the process of advising the service member about his or her financial affairs."

Rush called Academy Life's relationship with the NCOA "far more than an 'endorsement' of an insurance product by an impartial benevolent organization." The counselors receive no money from the association; rather, they earn sales commissions from Academy Life and seldom advise service members of that fact, he said.

"There is little question based on our review of the materials that the NCOA counselors routinely portray themselves as impartial advisors rather than as insurance salesmen with a direct financial interest in the transaction at hand," Rush wrote.

Rossetti said DoD is looking at other companies. He said the investigations already completed have led officials to believe the problems of unauthorized and deceptive sales practices are more widespread than previously thought. In response, he said, "The DoD inspector general is reviewing accreditation practices and enforcement procedures to ensure there is appropriate control over companies and agents selling insurance on military installations."

Local commanders can bar companies from their installations for a number of reasons, and local bans are not unusual. Pentagon officials, however, said they believe the Academy Life ban is the first ever imposed DoD-wide.

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