Financial Product Sales: Actions Needed to Protect Military Members Page: 23 of 28
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Appendix I: Additional Actions Needed to
Improve Oversight of Pay Allotments for
Insurance for Military Members
As a result of a report we issued in June 2005, the Department of Defense
(DOD) has agreed with our recommendations to improve aspects of its
oversight of insurance purchases by military members. 1 At the request of
the chairs of the House Committee on Government Reform and House
Committee on Armed Services as well as various other members of the
House of Representatives, we reviewed DOD's procedures to oversee the
sale of insurance products to military members, including the procedures
used to process pay deduction allotments to pay for insurance products.
Based on the work we conducted, we determined that DOD was not able
to monitor the extent to which service members were purchasing
supplement insurance because of problems with its personnel pay
databases. Pay information for service members is maintained by the
Defense Finance and Accounting Service (DFAS) in separate databases for
the different military services. However, we were not able, even with
DFAS assistance, to use information from these databases to reliably
determine the extent to which service members had purchased additional
insurance. For example, the codes in the databases used to identify an
insurance company are not the same for all services. Further, DOD and
service regulations permit the use of at least seven different allotment
forms, but not all of these forms explicityly identify which allotments are
for supplemental life insurance.
A major cause of these database-related problems is DOD's systems
supporting service members' pay, which we had previously found
unreliable.2 While a significant system enhancement project is under way
to improve the administration of military pay, DOD is likely to continue
operating with existing system constraints for several years. The
continued use of forms that do not require information and coding specific
to supplemental life insurance could cause allotment data to continue to
be unreliable for oversight purposes.
The absence of accurate data on the extent to which service members are
purchasing supplemental life insurance limits the ability of DOD policy
officials and installation solicitation coordinators to oversee such sales
2See GAO, DOD Systems Modernization: Management of Integrated Military Human
Capital Program Needs Additional Improvement, GAO-05-189 (Washington, D.C.: Feb. 11,
2005), and GAO, Military Pay Army National Guard Personnel Mobilized to Active Duty
Experienced Significant Pay Problems, GAO-04-89 (Washington, D.C.: Nov. 13, 2003).
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United States. Government Accountability Office. Financial Product Sales: Actions Needed to Protect Military Members, text, November 17, 2005; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc292981/m1/23/: accessed May 19, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.