Insurers Largely Pleased With Actions By States On Privacy
By and large, insurers are pleased with states’ work on putting privacy standards in place for a July 1 deadline set by the Gramm-Leach-Bliley Act of 1999.
The two exceptions they say are blocking an unobstructed view to uniform privacy standards are a bill primed for action in the California legislature and a regulation being crafted in Vermont.
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Depending on whom you ask, the number of states that have privacy regulations in place or will have them shortly totals between 37 and just over 40.
“The states have rallied and are performing their roles as functional regulators,” says Michael Lovendusky, senior counsel with the American Council of Life Insurers in Washington.
A number of states such as California, Massachusetts and Minnesota have 1982 NAIC model standards in place. Even if new laws or regulations are not immediately put in place July 1, insurers will have guidance, interviews suggest. And, even if a state department or legislature did not have or chose not to put a standard in place, they add, GLB’s requirements would become effective until a state established its own standards.
Both life and property-casualty companies were upset by S.B. 773 in California, a bill that was scheduled to be marked up and moved out of the Assembly Banking Committee to the Judiciary Committee.
The bill, sponsored by California State Senator Jackie Speier, D-San Mateo, would have established opt-in standards for financial information shared with third parties and an opt-out system for affiliates. An opt-in standard requires insurers to receive permission to use nonpublic personal information for marketing purposes. An opt-out, on the other hand, requires that an individual request the information not be used. California already has opt-in health privacy requirements in place.
The bill, says Nicole Mahrt, a spokeswoman for the American Insurance Association in Sacramento, failed by a vote of 5-3, which was one vote shy of the six needed for the bill to move.
Speier was being heavily lobbied by both insurers to make amendments to the bill.