Subject of Possible Rule Making: The insurance commissioner intends to adopt unfair practice rules prohibiting certain acts or practices in the sale of life insurance (including annuities) to Armed Forces personnel and their dependents on military installations in this state, including a requirement that selling agents must determine the appropriateness of any sale of insurance.

     Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 48.30.010.

     Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: The 109th congress enacted the Military Personnel Financial Services Protection Act (P.L. 109-290) "to protect members of the Armed Forces from unscrupulous practices regarding the sale of insurance, financial and investment products." The act requires states to adopt a model regulation jointly developed by the Department of Defense and the National Association of Insurance Commissioners not later than September 29, 2007. The act extends state laws or rules with respect to regulating the business of insurance or securities to military installations, except to the extent that such laws or rules directly conflict with applicable federal laws or rules. The rules will define unfair sales practices involving military personnel that are considered false, misleading, or deceptive.

     Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: Department of Defense (federal) and the National Association of Insurance Commissioners are required by the act to develop a model regulation setting forth unfair and prohibited sales practices, and that model is to be adopted by states in a "uniform manner" to protect members of the armed forces and their dependents from dishonest and predatory insurance sales practices on a military installation. The rules will include a requirement that selling agents must determine the appropriateness of any sale of insurance to a member of the Armed Forces or his or her dependent.

     Process for Developing New Rule: The rules adopted will follow the model regulation created jointly by the Department of Defense and the National Association of Insurance Commissioners, as prescribed by P.L. 109-290. Development of the model regulation has been subject to intense national debate. The deliberations have included representatives of the federal government, states, consumer and insurance company representatives, and other interested parties.

     Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting Kacy Scott, P.O. Box 40255, Olympia, WA 98504-0255, e-mail Kacys@oic.wa.gov, fax (360) 586-3109, by May 14, 2007.

April 4, 2007

Mike Kreidler

Insurance Commissioner

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