Insurance Privacy Protection Issues Continue To Percolate
Privacy protection for insurance consumers remains a highly visible public policy issue as recent discussions among regulators and insurers and a new bill introduced in California illustrate.
The need for agents to provide privacy notices if they shop policies on renewal was affirmed by regulators who voted to maintain that point in a Q&A developed during the recent spring meeting of the National Association of Insurance Commissioners here.
The Q&A is being developed to clarify points that have arisen following adoption of the NAIC’s Privacy of Consumer Financial and Health Information model in 1999.
Regulators have said the clarification is needed to fully protect consumers.
Producer groups object to limiting an exemption for agents in the model act, because they say it would impede business. Groups including the Independent Insurance Agents of America, Alexandria, Va.; the National Association of Professional Insurance Agents, Alexandria, Va., and the National Association of Health Underwriters, Arlington, Va., expressed their concern over regulators’ desire to limit the exemption.
Among the concerns raised, were producers’ legal liability if they could not act promptly and had to wait for permission from an insured to use private nonpublic information who either could not be reached or did not respond to an opt-out notice. The issues of timeliness and responsibility were raised with regard to making decisions when an existing carrier is being downgraded and the agent wants to shop the policy because of that.
There is one producer group that disagrees with the others. The Council of Insurance Agents and Brokers, Washington, maintains that if a producer wants to share an individual’s information with a third party, then the producer must give that individual notice and an opportunity to opt-out.
The CIAB says a solution to the issue of shopping at renewal would be to include a clause in the privacy notice stating that the producer intends to share the individual’s information at renewal.
For the most part, the issue of shopping at renewal does not affect life insurance producers who are members of the National Association of Insurance and Financial Advisors in Falls Church, Va., says Bill Anderson, a NAIFA vice president and associate general counsel.
Sharing of privacy is also addressed in a newly amended bill introduced by California Assemblyman Joe Nation, D-San Rafael.
The bill, AB 1775, was amended on March 21 and addresses privacy of nonpublic personal financial information.