[Federal Register: July 10, 2006 (Volume 71, Number 131)]
[Rules and Regulations]
[Page 38760-38770]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy06-3]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Office of the Secretary
[DoD-2006-OS-0065]
32 CFR Parts 43 and 50
RIN 0790-AH87
Personal Commercial Solicitation on DoD Installations
AGENCY: Department of Defense, Office of the Secretary of Defense.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule amends and removes the Department regulations
relating to policy and procedures on personal commercial solicitation
on DoD installations. It incorporates current policy letters that were
issued since the last publication of the regulations in February 1986.
They include policy on use of on-base financial institutions and non-
profit, tax exempt, private organizations to provide financial
education; limits on the use of commercial sponsorship to obtain
personal contact information for solicitation; and required reporting
of solicitation policy violations to higher headquarters. The revision
also includes a new solicitation evaluation form to help installations
detect solicitation policy violations.
DATES: Effective Date: July 10, 2006.
FOR FURTHER INFORMATION CONTACT: Colonel Michael A. Pachuta or Mr.
James M. Ellis at (703) 602-4994 or (703) 602-5009 respectively, or
main (703) 602-5001.
SUPPLEMENTARY INFORMATION: On Tuesday, April 19, 2005 (70 FR 20316),
the Department of Defense published a proposed rule. The following is a
summary of substantive comments, whether or not they were accepted or
rejected, and the rationale.
Comment 1: DepSecDef Memo, DoD Instructions Review--Phase II
directed, where feasible, to change Directives not requiring the SECDEF
or DEPSEC signature to Instructions.
Decision: Accepted. 1344.7 does not meet the DepSecDef's criteria
to remain a DoD Directive and will be reissued as a DoD Instruction.
[[Page 38761]]
Comment 2: Two civilians recommended all on-post insurance
solicitation be banned.
Decision: Rejected: The purpose of the Instruction is not to
prohibit insurance solicitation but to prevent unfair and predatory
sales practices.
Comment 3: The American Council of Life Insurers recommends the
solicitation office supervisor send a copy of each solicitation
evaluation form received to each registered company or company the
solicitor represents.
Decision: Rejected: The solicitation evaluation form is an internal
feedback tool to assess how the solicitation was performed. The agent
or company may request a copy by submitting a Freedom of Information
Act request.
Comment 4: A Marine Corps Captain recommends an on-base entity,
such as a civil law officer from base legal office, screen insurance
sales personnel seeking base access.
Decision: Accepted. Para 6.2.2. now states: ``Commanders will
ensure the agent's license status and complaint history are checked
with the appropriate state or federal regulators prior to granting
permission to solicit on the installation.''
Comment 5: Military Benefits Association believes DD Form 2885
(solicitation evaluation) is biased, recommends it be rewritten to
remove any propensity to evoke a critical response, and a copy of
submitted forms should be provided to both the agent and insurer.
Decision: Rejected. The questions are balanced and necessary to
determine whether or not the solicitor complied with DoD commercial
solicitation policy. The commander has the discretion to provide the
agent and insurer a copy of the form. The agent or insurer can also
request a copy of completed forms under the Freedom of Information Act.
Comment 6: Government Personnel Mutual Life Insurance recommends DD
Form 2885 (solicitation evaluation) be made available to the company
the salesman represents.
Decision: Rejected. The commander should have the discretion to
provide the form to the company when it is appropriate to do so. The
agent or company can request a copy of completed forms under the
Freedom of Information Act.
Comment 7: United Services Automobile Association recommends DoD
prohibit solicitation of all trainees as well as solicitation of any
DoD personnel in a mass or captive audience.
Decision: Accepted. The current policy prohibits solicitation of
recruits, trainees and transient personnel in a mass audience, which is
appropriate to protect the most junior and inexperienced DoD personnel
from potential chain of command and peer pressure associated with such
a solicitation. The new policy prohibits solicitation of any DoD
personnel in a captive audience where their attendance is not
completely voluntary.
Comment 8: First Command requested clarification of ``on-duty
status'' and to exclude meal times from being considered ``duty time''
for the purposes of prohibiting solicitation.
Decision: Partially accepted. If the purpose of the on-base meal
time meeting is to seek business or trade, it is considered
solicitation. To clarify, we expanded the definition of Personal
Commercial Solicitation in paragraph E2.1.15. as follows: ``Personal
contact, to include meetings, meals or telecommunications contact, for
the purpose of seeking private business or trade''.
Comment 9: Military Benefits Association agrees that rosters and
other official lists should not be used for solicitation; however, they
believe there are many legitimate sources, i.e., telephone directories,
the Internet, and commercially available mailing lists, the procurement
of which should not be a violation of DoD policy.
Decision: Accepted. We rewrote paragraph 6.4.5. to clarify that it
is prohibited to procure ``non-public listings'' of DoD personnel for
the purpose of solicitation. Note: DoD telephone directories are ``For
Official Use Only'' and are considered ``non-public listings''.
Comment 10: The American Council of Life Insurers recommends
paragraph 6.4.5. be changed to clarify that it is permitted to procure
``listings created by or obtained from public information such as e.g.,
telephone directories, government records other than Defense Department
records, and newspapers'' for the purpose of solicitation. ACLI further
recommends DoD clarify that: ``Public information can be utilized for
the purposes of commercial solicitation of Service members as long as
the listing is not directly for DoD personnel or in a manner that would
be disruptive to the mission of the Military Departments.''
Decision: Accepted. We rewrote paragraph 6.4.5. to clarify it is
prohibited to procure ``non-public listings'' of DoD personnel for the
purpose of solicitation.
Comment 11: Military Benefits Association recommends that
contacting DoD personnel via a government phone should not be a DoD
policy violation if the DoD member provided the number or if the agent
did not know it was a government phone.
Decision: Accepted. The new policy does not consider solicitor
contact via a government phone a violation if a pre-existing
relationship exists between the parties. We have expanded paragraph
6.4.15. to clarify that a pre-existing relationship means the DoD
member is a current client and did not request contact to be
terminated.
Comment 12: Office of the Connecticut State Attorney General
recommends the list of grounds that may result in denial, suspension,
or withdrawal of solicitation privileges should also include ``any
violations of the law of the state in which the base is located.''
Decision: Accepted. Added to the end of paragraph 6.5.1.1.
Comment 13: First Command recommends SF 1199A (direct deposit sign-
up form) be included in the definition of allotment forms solicitors
are prohibited to possess.
Decision: Accepted. Added to paragraph 6.5.1.6.
Comment 14: A Marine Corps Captain recommends rewording paragraph
6.5.1.6. to include: ``The possession of and any attempt to obtain
supplies of allotment forms used by military departments, or possession
or use of facsimiles thereof. This includes using a Service members
``MyPay'' account or other similar internet medium for the purpose of
establishing a direct deposit for the purchase of insurance or other
investment product.''
Decision: Accepted. Added to paragraph 6.5.1.6.
Comment 15: The National Association of Insurance Commissioners
recommends reporting all complaints involving insurance products be
reported immediately to the appropriate state insurance department.
Decision: Accepted. Expanded paragraph 6.5.4. to require commanders
to immediately report agents, companies or products that fail to meet
state or regulatory requirements to the appropriate regulatory
authorities.
Comment 16: Trans World Assurance recommends the ``show cause''
requirement in the current version of DoD Directive 1344.7 be retained
in the new Instruction.
Decision: Accepted. Paragraph 6.5.5. was rewritten to restore the
``show cause'' requirement.
Comment 17: A Government Accountability Office audit recommends:
``the SecDef direct the USD(P&R) to specify in the revised Directive
that the installation commander is responsible for notifying
[[Page 38762]]
state insurance regulators, the Service Secretariat and DoD, when the
commander has determined that agents or companies have violated DoD,
Service, or installation policies.''
Decision: Partially accepted. Not all DoD personal commercial
solicitation policy violations, such as soliciting without an
appointment or soliciting during duty hours, are not violations of
State or Federal law and would be of no interest to State and Federal
insurance and financial product regulators. Paragraph 6.5.5. was
rewritten to require installations to report violations that involve
the eligibility of the agent to hold a state license or meet regulatory
requirements, complaints involving the quality, suitability or
marketing methods, or if an agent or company is barred or suspended, to
the appropriate state or federal regulatory authorities.
Comment 18: A civilian recommends DoD require reporting of abusive
market conduct (deceptive sales practices) to State insurance
regulators.
Decision: Accepted. Added this requirement to paragraph 6.5.5.
Comment 19: A Government Accountability Office audit recommended
the SecDef direct USD(P&R) to develop and implement, with the Services,
a DoD-wide searchable violations database that uses consistent data
elements and coding across Services in revising DoD's solicitation
regulation.
Decision: Partially accepted. The Department has developed a DoD-
wide list of current enforcement actions and posted it on the DoD
Commanders Page Web site http://www.commanderspage.com. Paragraph
6.5.6. was expanded to include the requirement for installations to
report denial, suspension, or withdrawal of solicitation privileges to
PDUSD(P&R) so that information can be included on this list. The
Department believes maintaining a list, which includes violations that
do not result in denial, suspension, or withdrawal of solicitation
privileges, would dilute the validity and utility of the list.
Comment 20: The American Council of Life Insurers recommends DoD
guidance found in Title 32 at 43.6(e)(2)(vi) be maintained to assure
that, as a matter of due process, the lifting of a denial or withdrawal
is communicated effectively to every office and Department.
Decision: Accepted. Expanded paragraph 6.5.7. to require
PDUSD(P&R), the Military Departments, and appropriate State and Federal
regulatory agencies are notified when suspensions or withdrawals are
lifted.
Comment 21: American Fidelity Life Insurance Company recommends the
discontinuance of the use of ``off limits'' sanctions by the Armed
Forces Disciplinary Control Board (AFDCB).
Decision: Rejected. The long-standing DoD policy contained in
paragraph 6.5.8. authorizes the Secretaries of the Military Departments
to direct Armed Forces Disciplinary Control Boards to consider
applicable information for withdrawal of solicitation privileges and
take action the Boards deem appropriate. One action the Boards may deem
appropriate is to place an off-base establishment ``off-limits'' to
military personnel. That authority must remain available to Commanders
as a means to protect the health, morale and welfare of their
personnel.
Comment 22: The National Association of Insurance Commissioners
recommends DoD prohibit the display of sales material by solicitors
since such a display may be interpreted as an endorsement of a
company's products.
Decision: Rejected. Paragraph 6.6.4. gives the installation
commander the discretion to permit the display of sales literature in
designated locations. Commanders must ensure compliance with the Joint
Ethics Regulation, which regulates DoD endorsement of non-federal
entities.
Comment 23: The Defense Credit Union Council praised DoD for
including a prohibition in paragraph 6.6.4. to prohibit off-base banks
and credit unions from distributing competitive literature or forms
which mirrors guidance contained in Volume 5, Chapter 34 of the DoD
Financial Management Regulation.
Decision: Accepted. Added to para 6.6.4.
Comment 24: The Defense Credit Union Council recommends adding
language to ensure sales representatives possess the necessary
credentials (securities licenses and certifications) to provide
financial education and advice.
Decision: Partially accepted. Long-standing DoD policy precludes
commercial agents from providing financial education. However, we added
a requirement in paragraph 6.2.2. to check insurance and financial
product solicitor's license and complaint history.
Comment 25: The Military Benefits Association recommends financial
counseling be provided by trained certified personnel, should include
information on a wide-range of commercial products and not simply be
reinforcement for SGLI.
Decision: Rejected. Paragraph 6.7.1. identifies a wide-range of
financial counseling topics and paragraph 6.7.2. requires the Military
Departments to ensure financial counselors are qualified.
Comment 26: The Defense Credit Union Council recommends on-base
banks and credit unions be required to provide financial education and
training.
Decision: Partially accepted. Paragraph 6.7.5. of the Instruction
advises Commanders that on-base banks and credit unions are required to
provide financial counseling services as part of their financial
services offerings but does not mandate their use.
Comment 27: The American Fidelity Insurance Company recommends on-
base banks and credit unions not be given preferential treatment in
providing financial education classes.
Decision: Rejected. The draft policy does not mandate the use of
on-base banks and credit unions to provide financial education and
mirrors guidance already contained in the DoD Financial Management
Regulation.
Comment 28: The American Council of Life Insurers recommends all
financial services professionals, including insurance producers and
carriers, be allowed to demonstrate their professional qualifications
and ability to provide objective financial counseling services to
military service personnel. Or alternatively, that DoD use the services
offered by the Life and Health Insurance Foundation for Education
(http://www.life-line.org) or the National Association of Insurance
Commissioners or by the state where a military installation is located
to provide financial counseling services.
Decision: Partially accepted. Long-standing DoD policy prohibits
the use of commercial agents to provide financial education to DoD
personnel. If the other non-governmental organizations, such as the
Life and Health Insurance Foundation or the National Association of
Insurance Commissioners qualify as 501(c) 3 or 501(c) 23 organizations,
the Military Departments can approve them to provide financial
education in accordance with paragraph 6.7.6.3.
Comment 29: The Military Officers Association of America recommends
the Military Departments be authorized to approve IRS category 501(c)
19 organizations to conduct military benefits and financial education
briefings to DoD personnel, that IRS category 501(c) 23 organizations
are permitted to provide.
Decision: Rejected. By law, the principal purpose of 501(c) 23
organizations must be to provide insurance and other benefits to
veterans and their dependents. 501(c) 19 organizations must be operated
for one
[[Page 38763]]
or more of eight purposes, which may or may not include providing
insurance benefits for its members or their dependents.
Comment 30: The National Association of Insurance Commissioners
recommends DoD include the NAIC's informational brochure ``Life
Insurance for Military Personnel'' in any education program.
Decision: Partially accepted. The NAIC's brochure could be made
available for use if the NAIC qualifies as a 501(c) 3 tax exempt
organization and secures a memorandum of agreement to become a DoD
financial education partner. The Department and NAIC have drafted an
MOU to permit use of this brochure in military financial education
classes.
Comment 31: First Command recommends DoD delete: ``personal
computer banking'' from the definition of ``Financial Services'' in
Enclosure 2 or add: ``other financial institutions can provide personal
computer banking as long as access can be made via computer and/or
internet.''
Decision: Accepted. Deleted ``and personal computer banking'' from
parenthetical intended to elaborate on the meaning of ``electronic
banking'' in paragraph E2.1.8.
Comment 32: The National Association of Insurance Commissioners
recommends the definition of ``insurer'' be changed to: ``an entity
licensed by the appropriate department to engage in the business of
insurance.''
Decision: Accepted. Incorporated into paragraph E2.1.12.
Comment 33: The District of Columbia Government Department of
Insurance, Securities and Banking recommends the definition of
``Solicitation'' be stated in the disjunctive rather than the
conjunctive to avoid ambiguity.
Decision: Accepted. We revised the definition of ``Personal
Commercial Solicitation'' in paragraph E2.1.15. and eliminated all
``conjunctive ambiguities.''
Comment 34: First Command recommends changing the definition of
``Solicitation'' to: ``The act of offering a product of service for
sale by a private business including the offering and sale of insurance
or securities on a military installation.''
Decision: Rejected. Although these words are in the current
Directive's definition of Solicitation, they focus more on what is sold
versus how something is sold. Solicitation concerns how something is
sold versus what is sold. Therefore, we rewrote the definition in
paragraph E2.1.15. to focus the definition of ``Personal Commercial
Solicitation'' on how something is sold.
Comment 35: First Command recommends letting the insurance policy
suffice as a written description for each product or service the
companies intend to market to DoD personnel.
Decision: Partially accepted. Deleted the word ``separate'' before
``written description for each product or service'' in paragraph E3.1.
so the policy itself could meet the ``written description requirement''
if all other subsequent prerequisite requirements outlined in this
paragraph are met.
Comment 36: The National Association of Insurance Commissioners
recommends adding the following to paragraph E3.1.: ``Companies should
be able to demonstrate that each form to be used has been approved,
where applicable, by the insurance department in which the state is
located''.
Decision: Accepted. Added to paragraph E3.1.
Comment 37: Office of the Connecticut Attorney General recommended
any insurance product offered for sale by a commercial solicitor must
be filed with the insurance commissioner of the state in which the
installation is located.
Decision: Accepted. Added the following to paragraph E3.1:
``Companies should be able to demonstrate that each form to be used has
been approved, where applicable, by the insurance department of the
state where the installation is located. Insurance products solicited
to DoD personnel on overseas installations must conform to the
standards prescribed by the laws of the state where the company is
incorporated.''
Comment 38: First Command recommends DoD prohibit whole life
policies with restrictive clauses.
Decision: Rejected. Paragraph E3.1.1.2. requires insurance products
sold on DoD installations: ``contain no restrictions by reason of
military service or military occupational specialty of the insured,
unless such restrictions are clearly indicated on the face of the
contract''.
Comment 39: A Marine Corps Captain recommends having companies that
sell life insurance have Service members sign a form acknowledging they
clearly understand SGLI, and its cost and coverage.
Decision: Accepted. Added paragraph E3.1.1.5. to include a
requirement to inform Service members in writing of the cost and
availability of government subsidized insurance.
Comment 40: First Command recommends DoD allow annuity contracts to
be used to satisfy the requirements in para E3.1.4. for an agent to
provide the customer written documentation, which clearly shows how
much of the premium for an insurance product with a savings component
is allocated to savings and how much is allocated to insurance premiums
per year over the life of the policy.
Decision: Accepted. Nothing in the instruction specifically
precludes using the annuity contract to fulfill this requirement.
Comment 41: A private citizen recommends prohibiting allotments
from military paychecks.
Decision: Rejected. Allotments are for the member's convenience and
help ensure financial obligations will still be met when they deploy.
Comment 42: A Government Accountability Office audit recommends
SecDef direct the USD(P&R) to clarify the portion of the revised
Directive that pertains to the cooling off period that must elapse
before junior enlisted personnel can start as an allotment to purchase
supplemental life insurance.
Decision: Accepted. Paragraph E3.3.2. was rewritten as follows to
make this clarification: ``For personnel in pay grades E-4 and below,
in order to provide an opportunity to obtain financial counseling, at
least seven calendar days shall elapse between the signing of a life
insurance application and the certification of a military pay allotment
for any supplemental commercial life insurance. Installation Finance
Officers are responsible for ensuring this seven-day cooling-off period
is monitored and enforced. The purchaser's commanding officer may grant
a waiver of the seven-day cooling-off period requirement for good
cause, such as the purchaser's imminent deployment or permanent change
of station''.
Comment 43: The American Council of Life Insurers recommends DoD
require insurers to be members of the Insurance Marketplace Standards
Association (IMSA) in order to be eligible to solicit insurance on DoD
installations.
Decision: Rejected. Although requiring IMSA membership would be
desirable, the Joint Ethics Regulation prohibits this type of federal
endorsement of a non-federal entity and IMSA membership would not
necessarily guarantee compliance with DoD policies and IMSA membership
also requires payment of a substantial fee.
Comment 44: The American Council of Life Insurers recommends DoD
delete
[[Page 38764]]
the restriction that insurance agents and general agents approved to
solicit on overseas DoD installations may only represent one registered
commercial insurance company.
Decision: Rejected. Paragraph E4.3.2. allows this restriction to be
waived by the overseas commander if in the best interests of DoD
personnel.
Executive Order 12866, ``Regulatory Planning and Review''
It has been determined that 32 CFR part 50 is not a significant
regulatory action. The rule does not:
(1) Have an annual effect to the economy of $100 million or more or
adversely affect in a material way the economy; a section of the
economy; productivity; competition; jobs; the environment; public
health or safety; or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another Agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs, or the rights and obligations of
recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order.
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)
Section B of Appendix B to this rule contains information
collection requirements. As required by the Paperwork Reduction Act (44
U.S.C. Chapter 35), DoD has submitted an information clearance package
to the Office of Management and Budget for review. In response to DoD's
invitation to comment on any potential paperwork burden associated with
this rule (70 FR 28514-28515), no comments were received. However, one
favorable comment was forwarded to the Office of Management and Budget
during the 30-day review period (71 FR 29319).
Federalism (Executive Order 13132)
This regulatory action does not have federalism implications, as
set forth in Executive Order 13132. It will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. Chapter 6)
It has been certified that this rule is not subject to the
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if
promulgated, have a significant economic impact on a substantial number
of small entities.
Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''
It has been determined that this rule does not involve a Federal
mandate that may result in the expenditure by State, local and tribal
governments, in the aggregate, or by the private sector, of $100
million or more and that such rulemaking will not significantly or
uniquely affect small governments.
List of Subjects in 32 CFR Parts 43 and 50
Consumer protection, Federal buildings and facilities, Government
employees, Life insurance, Military personnel.
0
Accordingly, 32 CFR Chapter I, subchapter D is proposed to be amended
as follows:
PART 43--[REMOVED]
0
1. Part 43 is removed.
0
2. Part 50 is added to read as follows:
PART 50--PERSONAL COMMERCIAL SOLICITATION ON DOD INSTALLATIONS
General Provisions
Sec.
50.1 Purpose.
50.2 Applicability.
50.3 Definitions.
50.4 Policy.
50.5 Responsibilities.
50.6 Procedures.
50.7 Information requirements.
Appendix A to Part 50--Life Insurance Products and Securities.
Appendix B to Part 50--Overseas Life Insurance Registration Program.
Authority: 5 U.S.C. 301.
General Provisions
Sec. 50.1 Purpose.
This part:
(a) Implements section 577 of Public Law No. 109-163 (2006) and
establishes policy and procedures for personal commercial solicitation
on DoD installations.
(b) Continues the established annual DoD registration requirement
for the sale of insurance and securities on DoD installations overseas.
(c) Identifies prohibited practices that may cause withdrawal of
commercial solicitation privileges on DoD installations and establishes
notification requirements when privileges are withdrawn.
(d) Establishes procedures for persons solicited on DoD
installations to evaluate solicitors.
(e) Prescribes procedures for providing financial education
programs to military personnel.
Sec. 50.2 Applicability.
This part:
(a) Applies to the Office of the Secretary of Defense, the Military
Departments, the Chairman of the Joint Chiefs of Staff, the Combatant
Commands, the Office of the Inspector General of the Department of
Defense, the Defense Agencies, the DoD Field Activities, and all other
organizational entities in the Department of Defense (hereafter
referred to collectively as the ``DoD Components'').
(b) Does not apply to services furnished by residential service
companies, such as deliveries of milk, laundry, newspapers, and related
services to personal residences on the installation requested by the
resident and authorized by the installation commander.
(c) Applies to all other personal commercial solicitation on DoD
installations. It includes meetings on DoD installations of private,
non-profit, tax-exempt organizations that involve commercial
solicitation. Attendance at these meetings shall be voluntary and the
time and place of such meetings are subject to the discretion of the
installation commander or his or her designee.
Sec. 50.3 Definitions.
Agent. An individual who receives remuneration as a salesperson or
whose remuneration is dependent on volume of sales of a product or
products. (Also referred to as ``commercial agent'' or ``producer'').
In this part, the term ``agent'' includes ``general agent'' unless the
content clearly conveys a contrary intent.
``Authorized'' Bank and/or Credit Union. Bank and/or credit union
selected by the installation commander through open competitive
solicitation to provide exclusive on-base delivery of financial
services to the installation under a written operating agreement.
Banking institution. An entity chartered by a State or the Federal
Government to provide financial services.
Commercial sponsorship. The act of providing assistance, funding,
goods, equipment (including fixed assets), or services to an MWR
program or event by an individual, agency, association, company or
corporation, or other entity (sponsor) for a specified (limited) period
of time in return for public recognition or advertising promotions.
Enclosure 9
[[Page 38765]]
of DoD Instruction 1015.10 \1\ provides general policy governing
commercial sponsorship.
---------------------------------------------------------------------------
\1\ Copies may be obtained at http://www.dtic.mil/whs/directives/
.
---------------------------------------------------------------------------
Credit union. A cooperative nonprofit association, incorporated
under the Credit Union Act (12 U.S.C. 1751), or similar state statute,
for the purpose of encouraging thrift among its members and creating a
source of credit at a fair and reasonable rate of interest.
DoD installation. For the purposes of this part, any Federally
owned, leased, or operated base, reservation, post, camp, building, or
other facility to which DoD personnel are assigned for duty, including
barracks, transient housing, and family quarters.
DoD personnel. For the purposes of this part, all active duty
officers (commissioned and warrant) and enlisted members of the
Military Departments and all civilian employees, including
nonappropriated fund employees and special Government employees, of the
Department of Defense.
Financial services. Those services commonly associated with
financial institutions in the United States, such as electronic banking
(e.g., ATMs), in-store banking, checking, share and savings accounts,
fund transfers, sale of official checks, money orders and travelers
checks, loan services, safe deposit boxes, trust services, sale and
redemption of U.S. Savings Bonds, and acceptance of utility payments
and any other consumer-related banking services.
General agent. A person who has a legal contract to represent a
company. See the definition of ``Agent'' in this section.
Insurance carrier. An insurance company issuing insurance through
an association reinsuring or coinsuring such insurance.
Insurance product. A policy, annuity, or certificate of insurance
issued by an insurer or evidence of insurance coverage issued by a
self-insured association, including those with savings and investment
features.
Insurer. An entity licensed by the appropriate department to engage
in the business of insurance.
Military services. See Joint Publication 1-02, ``DoD Dictionary of
Military and Associated Terms.'' \2\
---------------------------------------------------------------------------
\2\ See http://www.dtic.mil/doctrine/jel/doddict/indexs.html.
---------------------------------------------------------------------------
Normal home enterprises. Sales or services that are customarily
conducted in a domestic setting and do not compete with an
installation's officially sanctioned commerce.
Personal commercial solicitation. Personal contact, to include
meetings, meals, or telecommunications contact, for the purpose of
seeking private business or trade.
Securities. Mutual funds, stocks, bonds, or any product registered
with the Securities and Exchange Commission except for any insurance or
annuity product issued by a corporation subject to supervision by State
insurance authorities.
Suspension. Temporary termination of privileges pending completion
of a commander's inquiry or investigation.
Withdrawal. Termination of privileges for a set period of time
following completion of a commander's inquiry or investigation.
Sec. 50.4 Policy.
(a) It is DoD policy to safeguard and promote the welfare of DoD
personnel as consumers by setting forth a uniform approach to the
conduct of all personal commercial solicitation and sales to them by
dealers and their agents. For those individuals and their companies
that fail to follow this policy, the opportunity to solicit on military
installations may be limited or denied as appropriate.
(b) Command authority includes authority to approve or prohibit all
commercial solicitation covered by this part. Nothing in this part
limits an installation commander's inherent authority to deny access to
vendors or to establish time and place restrictions on commercial
activities at the installation.
Sec. 50.5 Responsibilities.
(a) The Principal Deputy Under Secretary of Defense for Personnel
and Readiness (PDUSD(P&R)), under the Under Secretary of Defense for
Personnel and Readiness, shall:
(1) Identify and publish policies and procedures governing personal
commercial solicitation on DoD installations consistent with the policy
set forth in this part.
(2) Maintain and make available to installation commanders and
appropriate Federal personnel the current master file of all individual
agents, dealers, and companies who have their privileges withdrawn at
any DoD installation.
(3) Develop and maintain a list of all State Insurance
Commissioners' points of contact for DoD matters and forward this list
to the Military Services.
(b) The Heads of the DoD Components shall:
(1) Ensure implementation of this part and compliance with its
provisions.
(2) Require installations under their authority to report each
instance of withdrawal of commercial solicitation privileges.
(3) Submit lists of all individuals and companies who have had
their commercial solicitation privileges withdrawn at installations
under their authority to the PDUSD(P&R) in accordance with this part.
Sec. 50.6 Procedures.
(a) General. (1) No person has authority to enter a DoD
installation to transact personal commercial solicitation as a matter
of right. Personal commercial solicitation may be permitted only if the
following requirements are met:
(i) The solicitor is duly licensed under applicable Federal, State,
or municipal laws and has complied with installation regulations.
(ii) A specific appointment has been made for each meeting with the
individual concerned. Each meeting is conducted only in family quarters
or in other areas designated by the installation commander.
(iii) The solicitor agrees to provide each person solicited the
personal commercial solicitation evaluation included in DD Form 2885
\3\ during the initial appointment. The person being solicited is not
required to complete the evaluation. However, completed evaluations
should be sent by the person who was solicited to the office designated
by the installation commander on the back of the evaluation form.
---------------------------------------------------------------------------
\3\ Copies may be obtained from http://www.dtic.mil/whs/directives/infomgt/forms/forminfo/forminfopage2239.html
.
---------------------------------------------------------------------------
(iv) The solicitor agrees to provide DoD personnel with a written
reminder, prior to their making a financial commitment, that free legal
advice is available from the Office of the Staff Judge Advocate.
(2) Solicitors on overseas installations shall be required to
observe, in addition to the above, the applicable laws of the host
country. Upon request, the solicitor must present documentary evidence
to the installation commander that the company they represent, and its
agents, meet the applicable licensing requirements of the host country.
(b) Life insurance products and securities. (1) Life insurance
products and securities offered and sold to DoD personnel shall meet
the prerequisites described in Sec. 50.3.
(2) Installation commanders may permit insurers and their agents to
solicit on DoD installations if the requirements of paragraph (a) of
this section are met and if they are licensed under the insurance laws
of the State
[[Page 38766]]
where the installation is located. Commanders will ensure the agent's
license status and complaint history are checked with the appropriate
State or Federal regulators before granting permission to solicit on
the installation.
(3) In addition, before approving insurance and financial product
agents' requests for permission to solicit, commanders shall review the
list of agents and companies currently barred, banned, or limited from
soliciting on any or all DoD installations. This list may be viewed via
the Personal Commercial Solicitation Report ``quick link'' at http://www.commanderspage.com.
In overseas areas, the DoD Components shall
limit insurance solicitation to those insurers registered under the
provisions of appendix B to this part.
(4) The conduct of all insurance business on DoD installations
shall be by specific appointment. When establishing the appointment,
insurance agents shall identify themselves to the prospective purchaser
as an agent for a specific insurer.
(5) Installation commanders shall designate areas where interviews
by appointment may be conducted. The opportunity to conduct scheduled
interviews shall be extended to all solicitors on an equitable basis.
Where space and other considerations limit the number of agents using
the interviewing area, the installation commander may develop and
publish local policy consistent with this concept.
(6) Installation commanders shall make disinterested third-party
insurance counseling available to DoD personnel desiring counseling.
Financial counselors shall encourage DoD personnel to seek legal
assistance or other advice from a disinterested third-party before
entering into a contract for insurance or securities.
(7) In addition to the solicitation prohibitions contained in
paragraph (d) of this section, DoD Components shall prohibit the
following:
(i) The use of DoD personnel representing any insurer, dealing
directly or indirectly on behalf of any insurer or any recognized
representative of any insurer on the installation, or as an agent or in
any official or business capacity with or without compensation.
(ii) The use of an agent as a participant in any Military Service-
sponsored education or orientation program.
(iii) The designation of any agent or the use by any agent of
titles (for example, ``Battalion Insurance Counselor,'' ``Unit
Insurance Advisor,'' ``Servicemen's Group Life Insurance Conversion
Consultant,'') that in any manner, states, or implies any type of
endorsement from the U.S. Government, the Armed Forces, or any State or
Federal agency or government entity.
(iv) The use of desk space for interviews for other than a specific
prearranged appointment. During such appointment, the agent shall not
be permitted to display desk signs or other materials announcing his or
her name or company affiliation.
(v) The use of an installation ``daily bulletin,'' marquee,
newsletter, Web page, or other official notice to announce the presence
of an agent and/or his or her availability.
(c) Supervision of on-base commercial activities. (1) All pertinent
installation regulations shall be posted in a place easily accessible
to those conducting and receiving personal commercial solicitation on
the installation.
(2) The installation commander shall make available a copy of
installation regulations to anyone conducting on-base commercial
solicitation activities warning that failure to follow the regulations
may result in the loss of solicitation privileges.
(3) The installation commander, or designated representative, shall
inquire into any alleged violations of this part or of any questionable
solicitation practices. The DD Form 2885 is provided as a means to
supervise solicitation activities on the installation.
(d) Prohibited practices. The following commercial solicitation
practices shall be prohibited on all DoD installations:
(1) Solicitation of recruits, trainees, and transient personnel in
a group setting or ``mass'' audience and solicitation of any DoD
personnel in a ``captive'' audience where attendance is not voluntary.
(2) Making appointments with or soliciting military or DoD civilian
personnel during their normally scheduled duty hours.
(3) Soliciting in barracks, day rooms, unit areas, transient
personnel housing, or other areas where the installation commander has
prohibited solicitation.
(4) Use of official military identification cards or DoD vehicle
decals by active duty, retired or reserve members of the Military
Services to gain access to DoD installations for the purpose of
soliciting. When entering the installation for the purpose of
solicitation, solicitors with military identification cards and/or DoD
vehicle decals must present documentation issued by the installation
authorizing solicitation.
(5) Procuring, attempting to procure, supplying, or attempting to
supply non-public listings of DoD personnel for purposes of commercial
solicitation, except for releases made in accordance with DoD Directive
5400.7.\4\
---------------------------------------------------------------------------
\4\ See footnote 1 to Sec. 50.3.
---------------------------------------------------------------------------
(6) Offering unfair, improper, or deceptive inducements to purchase
or trade.
(7) Using promotional incentives to facilitate transactions or to
eliminate competition.
(8) Using manipulative, deceptive, or fraudulent devices, schemes,
or artifices, including misleading advertising and sales literature.
All financial products, which contain insurance features, must clearly
explain the insurance features of those products.
(9) Using oral or written representations to suggest or give the
appearance that the Department of Defense sponsors or endorses any
particular company, its agents, or the goods, services, and commodities
it sells.
(10) DoD personnel making personal commercial solicitations or
sales to DoD personnel who are junior in rank or grade, or to the
family members of such personnel, except as authorized in Section 2-205
and 5-409 of the Joint Ethics Regulation, DoD 5500.7-R.\5\
---------------------------------------------------------------------------
\5\ See footnote 1 to Sec. 50.3.
---------------------------------------------------------------------------
(11) Entering into any unauthorized or restricted area.
(12) Using any portion of installation facilities, including
quarters, as a showroom or store for the sale of goods or services,
except as specifically authorized by DoD Directive 1330.17 \6\ and DoD
Instructions 1015.10, 1000.15 \7\ and 1330.21.\8\ This does not apply
to normal home enterprises that comply with applicable State and local
laws and installation rules.
---------------------------------------------------------------------------
\6\ See footnote 1 to Sec. 50.3.
\7\ See footnote 1 to Sec. 50.3.
\8\ See footnote 1 to Sec. 50.3.
---------------------------------------------------------------------------
(13) Soliciting door to door or without an appointment.
(14) Unauthorized advertising of addresses or telephone numbers
used in personal commercial solicitation activities conducted on the
installation, or the use of official positions, titles, or organization
names, for the purpose of personal commercial solicitation, except as
authorized in DoD 5500.7-R. Military grade and Military Service as part
of an individual's name (e.g., Captain Smith, U.S. Marine Corps) may be
used in the same manner as conventional titles, such as ``Mr.'',
``Mrs.'', or ``Honorable''.
(15) Contacting DoD personnel by calling a government telephone,
faxing to a government fax machine, or by sending e-mail to a
government computer, unless a pre-existing relationship (i.e., the DoD
member is a
[[Page 38767]]
current client or requested to be contacted) exists between the parties
and the DoD member has not asked for contact to be terminated.
(e) Denial, suspension, and withdrawal of installation solicitation
privileges. (1) The installation commander shall deny, suspend, or
withdraw permission for a company and its agents to conduct commercial
activities on the base if such action is in the best interests of the
command. The grounds for taking these actions may include, but are not
limited to, the following:
(i) Failure to meet the licensing and other regulatory requirements
prescribed in this part or violations of the State law where the
installation is located. Commanders will request that appropriate state
officials determine whether a company or agent violated State law.
(ii) Commission of any of the practices prohibited in paragraphs
(b)(6) and (d) of this section.
(iii) Substantiated complaints and/or adverse reports regarding the
quality of goods, services, and/or commodities, and the manner in which
they are offered for sale.
(iv) Knowing and willful violations of Public Law 90-321.
(v) Personal misconduct by a company's agent or representative
while on the installation.
(vi) The possession of, and any attempt to obtain supplies of
direct deposit forms, or any other form or device used by Military
Departments to direct a Service member's pay to a third party, or
possession or use of facsimiles thereof. This includes using or
assisting in using a Service member's ``MyPay'' account or other
similar Internet medium for the purpose of establishing a direct
deposit for the purchase of insurance or other investment product.
(vii) Failure to incorporate and abide by the Standards of Fairness
policies contained in DoD Instruction 1344.9.\9\
---------------------------------------------------------------------------
\9\ See footnote 1 to Sec. 50.3.
---------------------------------------------------------------------------
(2) The installation commander may determine that circumstances
dictate the immediate suspension of solicitation privileges while an
investigation is conducted. Upon suspending solicitation privileges,
the commander shall promptly inform the agent and the company the agent
represents, in writing.
(3) In suspending or withdrawing solicitation privileges, the
installation commander shall determine whether to limit such action to
the agent alone or extend it to the company the agent represents. This
decision shall be based on the circumstances of the particular case,
including, but not limited to, the nature of the violations, frequency
of violations, the extent to which other agents of the company have
engaged in such practices and any other matters tending to show the
culpability of an individual and the company.
(4) If the investigation determines an agent or company does not
possess a valid license or the agent, company, or product has failed to
meet other State or Federal regulatory requirements, the installation
commander shall immediately notify the appropriate regulatory
authorities.
(5) In a withdrawal action, the commander shall allow the
individual or company an opportunity to show cause as to why the action
should not be taken. To ``show cause'' means an opportunity must be
given for the aggrieved party to present facts on an informal basis for
the consideration of the installation commander or the commander's
designee. The installation commander shall make a final decision
regarding withdrawal based upon the entire record in each case.
Installation commanders shall report concerns or complaints involving
the quality or suitability of financial products or concerns or
complaints involving marketing methods used to sell these products to
the appropriate State and Federal regulatory authorities. Also,
installation commanders shall report any suspension or withdrawal of
insurance or securities products solicitation privileges to the
appropriate State or Federal regulatory authorities.
(6) The installation commander shall inform the Military Department
concerned of any denial, suspension, withdrawal, or reinstatement of an
agent or company's solicitation privileges and the Military Department
shall inform the Office of the PDUSD(P&R), which will maintain a list
of insurance and financial product companies and agents currently
barred, banned, or otherwise limited from soliciting on any or all DoD
installations. This list may be viewed at http://www.commanderspage.com.
If warranted, the installation commander may
recommend to the Military Department concerned that the action taken be
extended to other DoD installations. The Military Department may extend
the action to other military installations in the Military Department.
The PDUSD(P&R), following consultation with the Military Department
concerned, may order the action extended to other Military Departments.
(7) All suspensions or withdrawals of privileges may be permanent
or for a set period of time. If for a set period, when that period
expires, the individual or company may reapply for permission to
solicit through the installation commander or Military Department
originally imposing the restriction. The installation commander or
Military Department reinstating permission to solicit shall notify the
Office of the PDUSD(P&R) and appropriate State and Federal regulatory
agencies when such suspensions or withdrawals are lifted.
(8) The Secretaries of the Military Departments may direct the
Armed Forces Disciplinary Control Boards in all geographical areas in
which the grounds for withdrawal action have occurred to consider all
applicable information and take action that the Boards deem
appropriate.
(9) Nothing in this part limits the authority of the installation
commander or other appropriate authority from requesting or instituting
other administrative and/or criminal action against any person,
including those who violate the conditions and restrictions upon which
installation entry is authorized.
(f) Advertising and commercial sponsorship. (1) The Department of
Defense expects voluntary observance of the highest business ethics by
commercial enterprises soliciting DoD personnel through advertisements
in unofficial military publications when describing goods, services,
commodities, and the terms of the sale (including guarantees,
warranties, and the like).
(2) The advertising of credit terms shall conform to the provisions
of 15 U.S.C. 1601 as implemented by Federal Reserve Board Regulation Z
according to 12 CFR part 226.
(3) Solicitors may provide commercial sponsorship to DoD Morale,
Welfare and Recreation programs or events according to DoD Instruction
1015.10. However, sponsorship may not be used as a means to obtain
personal contact information for any participant at these events
without written permission from the individual participant. In
addition, commercial sponsors may not use sponsorship to advertise
products and/or services not specifically agreed to in the sponsorship
agreement.
(4) The installation commander may permit organizations to display
sales literature in designated locations subject to command policies.
In accordance with DoD 7000.14-R,\10\ Volume 7(a), distribution of
competitive literature or forms by off-base banks and/or credit unions
is prohibited on installations where an authorized on-base bank and/or
credit union exists.
---------------------------------------------------------------------------
\10\ See footnote 1 to Sec. 50.3.
---------------------------------------------------------------------------
[[Page 38768]]
(g) Educational programs. (1) The Military Departments shall
develop and disseminate information and provide educational programs
for members of the Military Services on their personal financial
affairs, including such subjects as insurance, Government benefits,
savings, budgeting, and other financial education and assistance
requirements outlined in DoD Instruction 1342.27.\11\ The Military
Departments shall ensure that all instructors are qualified as
appropriate for the subject matter presented. The services of
representatives of authorized on-base banks and credit unions may be
used for this purpose. Under no circumstances shall commercial agents,
including representatives of loan, finance, insurance, or investment
companies, be used for this purpose. Presentations shall only be
conducted at the express request of the installation commander.
---------------------------------------------------------------------------
\11\ See footnote 1 to Sec. 50.3.
---------------------------------------------------------------------------
(2) The Military Departments shall also make qualified personnel
and facilities available for individual counseling on loans and
consumer credit transactions in order to encourage thrift and financial
responsibility and promote a better understanding of the wise use of
credit, as prescribed in DoD 7000.14-R.
(3) The Military Departments shall encourage military members to
seek advice from a legal assistance officer, the installation financial
counselor, their own lawyer, or a financial counselor, before making a
substantial loan or credit commitment.
(4) Each Military Department shall provide advice and guidance to
DoD personnel who have a complaint under DoD 1344.9 or who allege a
criminal violation of its provisions, including referral to the
appropriate regulatory agency for processing of the complaint.
(5) Banks and credit unions operating on DoD installations are
required to provide financial counseling services as an integral part
of their financial services offerings. Representatives of and materials
provided by authorized banks and/or credit unions located on military
installations may be used to provide the educational programs and
information required by this part subject to the following conditions:
(i) If the bank or credit union operating on a DoD installation
sells insurance or securities or has any affiliation with a company
that sells or markets insurance or other financial products, the
installation commander shall consider that company's history of
complying with this part before authorizing the on-base financial
institution to provide financial education.
(ii) All prospective educators must agree to use appropriate
disclaimers in their presentations and on their other educational
materials. The disclaimers must clearly indicate that they do not
endorse or favor any commercial supplier, product, or service, or
promote the services of a specific financial institution.
(6) Use of other non-government organizations to provide financial
education programs is limited as follows:
(i) Under no circumstances shall commercial agents, including
employees or representatives of commercial loan, finance, insurance, or
investment companies, be used.
(ii) The limitation in paragraph (g)(6)(i) of this section does not
apply to educational programs and information regarding the Survivor
Benefits Program and other government benefits provided by tax-exempt
organizations under section (c)(23) of 26 U.S.C. 501 or by any
organization providing such a benefit under a contract with the
Government.
(iii) Educators from non-government, non-commercial organizations
expert in personal financial affairs and their materials may, with
appropriate disclaimers, provide the educational programs and
information required by this part if approved by a Presidentially-
appointed, Senate-confirmed civilian official of the Military
Department concerned. Presentations by approved organizations shall be
conducted only at the express request of the installation commander.
The following criteria shall be used when considering whether to permit
a non-government, non-commercial organization to present an educational
program or provide materials on personal financial affairs:
(A) The organization must qualify as a tax-exempt organization
under 5 U.S.C. 501(c)(3) or 5 U.S.C. 501(c)(23).
(B) If the organization has any affiliation with a company that
sells or markets insurance or other financial products, the approval
authority shall consider that company's history of complying with this
part.
(C) All prospective educators must use appropriate disclaimers, in
their presentations and on their other educational materials, which
clearly indicate that they and the Department of Defense do not endorse
or favor any commercial supplier, product, or service or promote the
services of a specific financial institution.
Sec. 50.7 Information requirements.
The reporting requirements concerning the suspension or withdrawal
of solicitation privileges have been assigned Report Control Symbol
(RCS) DD-P&R(Q)2182 in accordance with DoD 8910.1-M.\12\
---------------------------------------------------------------------------
\12\ See footnote 1 to Sec. 50.3.
---------------------------------------------------------------------------
Appendix A to Part 50--Life Insurance Products and Securities
A. Life Insurance Product Content Prerequisites
Companies must provide DoD personnel a written description for
each product or service they intend to market to DoD personnel on
DoD installations. These descriptions must be written in a manner
that DoD personnel can easily understand, and fully disclose the
fundamental nature of the policy. Companies must be able to
demonstrate that each form to be used has been filed with and
approved, where applicable, by the insurance department of the State
where the installation is located. Insurance products marketed to
DoD personnel on overseas installations must conform to the
standards prescribed by the laws of the State where the company is
incorporated.
1. Insurance products, other than certificates or other evidence
of insurance issued by a self-insured association, offered and sold
worldwide to personnel on DoD installations, must:
a. Comply with the insurance laws of the State or country in
which the installation is located and the requirements of this part.
b. Contain no restrictions by reason of Military Service or
military occupational specialty of the insured, unless such
restrictions are clearly indicated on the face of the contract.
c. Plainly indicate any extra premium charges imposed by reason
of Military Service or military occupational specialty.
d. Contain no variation in the amount of death benefit or
premium based upon the length of time the contract has been in
force, unless all such variations are clearly described in the
contract.
e. In plain and readily understandable language, and in type
font at least as large as the font used for the majority of the
policy, inform Service members of:
1. The availability and cost of government subsidized
Servicemen's Group Life Insurance.
2. The address and phone number where consumer complaints are
received by the State insurance commissioner for the State in which
the insurance product is being sold.
3. That the U.S. Government has in no way sanctioned,
recommended, or encouraged the sale of the product being offered.
With respect to the sale or solicitation of insurance on Federal
land or facilitates located outside the United States, insurance
products must contain the address and phone number where consumer
complaints are received by the State insurance commissioner for the
State which has issued the agent a resident license or the company
is domiciled, as applicable.
[[Page 38769]]
2. To comply with paragraphs A.1.b., A.1.c. and A.1.d., an
appropriate reference stamped on the first page of the contract
shall draw the attention of the policyholder to any restrictions by
reason of Military Service or military occupational specialty. The
reference shall describe any extra premium charges and any
variations in the amount of death benefit or premium based upon the
length of time the contract has been in force.
3. Variable life insurance products may be offered provided they
meet the criteria of the appropriate insurance regulatory agency and
the Securities and Exchange Commission.
4. Insurance products shall not be marketed or sold disguised as
investments. If there is a savings component to an insurance
product, the agent shall provide the customer written documentation,
which clearly explains how much of the premium goes to the savings
component per year broken down over the life of the policy. This
document must also show the total amount per year allocated to
insurance premiums. The customer must be provided a copy of this
document that is signed by the insurance agent.
B. Sale of Securities
1. All securities must be registered with the Securities and
Exchange Commission.
2. All sales of securities must comply with the appropriate
Securities and Exchange Commission regulations.
3. All securities representatives must apply to the commander of
the installation on which they desire to solicit the sale of
securities for permission to solicit.
4. Where the accredited insurer's policy permits, an overseas
accredited life insurance agent--if duly qualified to engage in
security activities either as a registered representative of the
National Association of Securities Dealers or as an associate of a
broker or dealer registered with the Securities and Exchange
Commission--may offer life insurance and securities for sale
simultaneously. In cases of commingled sales, the allotment of pay
for the purchase of securities cannot be made to the insurer.
C. Use of the Allotment of Pay System
1. Allotments of military pay for life insurance products shall
be made in accordance with DoD 7000.14-R.
2. For personnel in pay grades E-4 and below, in order to obtain
financial counseling, at least seven calendar days shall elapse
between the signing of a life insurance application and the
certification of a military pay allotment for any supplemental
commercial life insurance. Installation Finance Officers are
responsible for ensuring this seven-day cooling-off period is
monitored and enforced. The purchaser's commanding officer may grant
a waiver of the seven-day cooling-off period requirement for good
cause, such as the purchaser's imminent deployment or permanent
change of station.
D. Associations--General
The recent growth and general acceptability of quasi-military
associations offering various insurance plans to military personnel
are acknowledged. Some associations are not organized within the
supervision of insurance laws of either a State or the Federal
Government. While some are organized for profit, others function as
nonprofit associations under Internal Revenue Service regulations.
Regardless of the manner in which insurance is offered to members,
the management of the association is responsible for complying fully
with the policies contained in this part.
Appendix B to Part 50--Overseas Life Insurance Registration Program
A. Registration Criteria
1. Initial Registration
a. Insurers must demonstrate continuous successful operation in
the life insurance business for a period of not less than 5 years on
December 31 of the year preceding the date of filing the
application.
b. Insurers must be listed in Best's Life-Health Insurance
Reports and be assigned a rating of B+ (Very Good) or better for the
business year preceding the Government's fiscal year for which
registration is sought.
2. Re-Registration
a. Insurers must demonstrate continuous successful operation in
the life insurance business, as described in paragraph A.1.a. of
this appendix.
b. Insurers must retain a Best's rating of B+ or better, as
described in paragraph A.1.b. of this appendix.
c. Insurers must demonstrate a record of compliance with the
policies found in this part.
3. Waiver Provisions
Waivers of the initial registration or re-registration
provisions shall be considered for those insurers demonstrating
substantial compliance with the aforementioned criteria.
B. Application Instructions
1. Applications Filed Annually. Insurers must apply by June 30
of each year for solicitation privileges on overseas U.S. military
installations for the next fiscal year beginning October 1.
Applications e-mailed, faxed, or postmarked after June 30 shall not
be considered.
2. Application prerequisites. A letter of application, signed by
the President, Vice President, or designated official of the
insurance company shall be forwarded to the Principal Deputy Under
Secretary of Defense (Personnel and Readiness), Attention: Morale,
Welfare and Recreation (MWR) Policy Directorate, 4000 Defense,
Pentagon, Washington, DC 20301-4000. The registration criteria in
paragraph A1.a. or A1.b. of this appendix must be met to satisfy
application prerequisites. The letter shall contain the information
set forth below, submitted in the order listed. Where criteria are
not applicable, the letter shall so state.
a. The overseas Combatant Commands (e.g., U.S. European Command,
U.S. Pacific Command, U.S. Central Command, U.S. Southern Command)
where the company presently solicits, or plans to solicit, on U.S.
military installations.
b. A statement that the company has complied with, or shall
comply with, the applicable laws of the country or countries wherein
it proposes to solicit. ``Laws of the country'' means all national,
provincial, city, or county laws or ordinances of any country, as
applicable.
c. A statement that the products to be offered for sale conform
to the standards prescribed in appendix A to this part and contain
only the standard provisions such as those prescribed by the laws of
the State where the company's headquarters are located.
d. A statement that the company shall assume full responsibility
for the acts of its agents with respect to solicitation. If
warranted, the number of agents may be limited by the overseas
command concerned.
e. A statement that the company shall only use agents who have
been licensed by the appropriate State and registered by the
overseas command concerned to sell to DoD personnel on DoD
installations.
f. Any explanatory or supplemental comments that shall assist in
evaluating the application.
g. If the Department of Defense requires facts or statistics
beyond those normally involved in registration, the company shall
make separate arrangements to provide them.
h. A statement that the company's general agent and other
registered agents are appointed in accordance with the prerequisites
established in section C of this appendix.
3. If a company is a life insurance company subsidiary, it must
be registered separately on its own merits.
C. Agent Requirements
The overseas Combatant Commanders shall apply the following
principles in registering agents:
1. An agent must possess a current State license. This
requirement may be waived for a registered agent continuously
residing and successfully selling life insurance in foreign areas,
who, through no fault of his or her own, due to State law (or
regulation) governing domicile requirements, or requiring that the
agent's company be licensed to do business in that State, forfeits
eligibility for a State license. The request for a waiver shall
contain the name of the State or jurisdiction that would not renew
the agent's license.
2. General agents and agents may represent only one registered
commercial insurance company. This principle may be waived by the
overseas Combatant Commander if multiple representations are in the
best interest of DoD personnel.
3. An agent must have at least 1 year of successful life
insurance underwriting experience in the United States or its
territories, generally within the 5 years preceding the date of
application, in order to be approved for overseas solicitation.
4. The overseas Combatant Commanders may exercise further agent
control procedures as necessary.
5. An agent, once registered in an overseas area, may not change
affiliation from the staff of one general agent to another and
retain registration, unless the previous employer certifies in
writing that the release is without justifiable prejudice. Overseas
Combatant Commanders will have final authority to
[[Page 38770]]
determine justifiable prejudice. Indebtedness of an agent to a
previous employer is an example of justifiable prejudice.
D. Announcement of Registration
1. Registration by the Department of Defense upon annual
applications of insurers shall be announced as soon as practicable
by notice to each applicant and by a list released annually in
September to the appropriate overseas Combatant Commanders. Approval
does not constitute DoD endorsement of the insurer or its products.
Any advertising by insurers or verbal representation by its agents,
which suggests such endorsement, is prohibited.
2. In the event registration is denied, specific reasons for the
denial shall be provided to the applicant.
a. The insurer shall have 30 days from the receipt of
notification of denial of registration (sent certified mail, return
receipt requested) in which to request reconsideration of the
original decision. This request must be in writing and accompanied
by substantiating data or information in rebuttal of the specific
reasons upon which the denial was based.
b. Action by the Office of the PDUSD(P&R) on a request for
reconsideration is final.
c. An applicant that is presently registered as an insurer shall
have 90 calendar days from final action denying registration in
which to close operations.
3. Upon receiving an annual letter approving registration, each
company shall send to the applicable overseas Combatant Commander a
verified list of agents currently registered for overseas
solicitation. Where applicable, the company shall also include the
names and prior military affiliation of new agents for whom original
registration and permission to solicit on base is requested.
Insurers initially registered shall be furnished instructions by the
Department of Defense for agent registration procedures in overseas
areas.
4. Material changes affecting the corporate status and financial
condition of the company that occur during the fiscal year of
registration must be reported to the MWR Policy Directorate at the
address in paragraph B.2. of this appendix as they occur.
a. The Office of the PDUSD(P&R) reserves the right to terminate
registration if such material changes appear to substantially affect
the financial and operational standards described in section A of
this appendix on which registration was based.
b. Failure to report such material changes may result in
termination of registration regardless of how it affects the
standards.
5. If an analysis of information furnished by the company
indicates that unfavorable trends are developing that could
adversely affect its future operations, the Office of the PDUSD(P&R)
may, at its option, bring such matters to the attention of the
company and request a statement as to what action, if any, is
considered to deal with such unfavorable trends.
Dated: June 27, 2006.
L.M. Bynum,
OSD Federal Register Liaison Officer, DoD.
[FR Doc. E6-10360 Filed 7-7-06; 8:45 am]
BILLING CODE 5001-06-P