Sorting Through the Auto, Life, Health Insurance Maze

Business writing

When military members are preparing to deploy or move to a new duty station, there's always a long list of things to consider -- out processing, paying bills, making arrangements for family. The list goes on and on. While taking care of insurance matters certainly isn't at the top of the list, it's a step you have to consider.

Most military members have at least one story about an insurance headache they've faced during a PCS. In New Jersey, drivers are required to confirm auto coverage in writing. In Massachusetts and Hawaii, the only way to get proof of insurance is through the mail or in person -- not online or by fax. Some states allow you to purchase life insurance online, but others won't.

The current state-by-state maze of regulations is the problem.

Each of the 50 states, the District of Columbia, and three U.S. territories separately regulate local insurance markets. That's 54 sets of rules.

And, U.S. military members are disproportionately penalized by the current system because one third of all military members move every year. Not only is this confusing and time-consuming, it costs a lot of money. For example, USAA members are forced to absorb -- through insurance premiums -- approximately $200 million per year in state regulatory costs.

A simple solution, one set of rules.

A solution currently under consideration in Congress could modernize insurance regulation through the creation of an optional federal insurance charter, similar to the banking industry. This proposal would allow insurance companies the option of complying with a single federal regulator or continuing with the state-regulated system.

A single regulator would make insurance easier and less expensive to obtain -- reducing the hassle for military members. It would also enable companies to pass along significant savings and focus more effort on customer service, innovation, and delivery of new products.

You can help

If you have ever been inconvenienced by the complicated maze of insurance regulation or if you would like to help make insurance easier for military members, we would like to hear from you.

John W. Townes, III, joined USAA as Vice President, Military Affairs in April 2005 following retirement from the Navy as a Rear Admiral.

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