VA Life Insurance:

Premiums and Program Reserves Need More Timely Adjustments

HRD-92-71: Published: Jul 20, 1992. Publicly Released: Jul 20, 1992.

Additional Materials:

Contact:

David P. Baine
(202) 512-7215
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the Department of Veterans Affairs' (VA) Servicemen's Group Life Insurance Program, focusing on the: (1) adequacy of program reserves; and (2) extent of the government's liability for claims under the program.

GAO found that: (1) the Program's operating reserves are inadequate, but the Program's contingency reserve is excessive; (2) between 1982 and 1991, VA overcharged military personnel for insurance, resulting in an excess in the revolving fund; (3) VA has not appropriately set insurance premiums under the Program; (4) the Program contract does not state whether VA or the contractor pays claims in certain peacetime situations; and (5) VA and the contractor reached an agreement on claims liability, but VA has not amended the contract.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: VA has disagreed with the recommendation. The agency believes that $50 million is the proper level for this reserve.

    Recommendation: The Secretary of Veterans Affairs should reduce the contingency reserve held by Prudential to $25 million and use the excess funds, if necessary, in lieu of transfers from the revolving fund to provide a portion of the additional operating reserves.

    Agency Affected: Department of Veterans Affairs

  2. Status: Closed - Not Implemented

    Comments: VA believes that it sets true premiums and plans no action on this recommendation.

    Recommendation: The Secretary of Veterans Affairs should compute each year the true premiums to be paid by Program participants and adjust premiums, as appropriate. The Secretary should consider excess funds in the contingency reserve as a program resource when making this computation.

    Agency Affected: Department of Veterans Affairs

  3. Status: Closed - Not Implemented

    Comments: VA disagrees with this recommendation and plans no action.

    Recommendation: The Secretary of Veterans Affairs should negotiate with Prudential to amend the contract to explicitly state which party is responsible for paying peacetime claims in scenarios that were the subject of discussions between VA and the contractor during 1990.

    Agency Affected: Department of Veterans Affairs

 

Explore the full database of GAO's Open Recommendations »

Sep 20, 2016

Sep 19, 2016

Sep 16, 2016

Jul 29, 2016

Jul 28, 2016

Jun 27, 2016

Jun 6, 2016

May 11, 2016

Apr 28, 2016

Mar 21, 2016

Looking for more? Browse all our products here