Insurance agents and companies are fighting privacy battles on a number of fronts, opposing legislation they believe unnecessarily inhibits legitimate commerce.
The primary bills are moving through the Senate, and cover such topics as the use of Social Security numbers, commercial e-mail and online privacy.
In each instance, the insurance industry complains that the legislation, while well intended, imposes unfair costs and burdens on financial service providers.
Looking first at Social Security numbers, the Senate Judiciary Committee recently approved S. 848, legislation introduced by Sen. Dianne Feinstein, D-Calif., that would prohibit the sale or display of Social Security numbers to the public.
The legislation is aimed at fighting the growing problem of identity theft, which Feinstein says increased by 500% from 1998 to 2001.
“By reducing public access to Social Security numbers, this legislation will help reduce the number of identity theft crimes,” Feinstein says.
The legislation would prohibit the sale or display of a Social Security number without the individuals consent, except for certain business-to-business or business-to-government transactions.
In addition, it would give consumers the right to refuse to give out their Social Security numbers to companies and to enforce their rights with a private right of action.
“This legislation strikes a balance between the need for legitimate business uses of the Social Security number and the need to prevent identity theft,” Feinstein says.
But Jim Pitts, executive director of the Washington-based Financial Services Coordinating Council, says S. 848 would impose unnecessary costs and burdens on financial institutions without providing additional protection to consumers.
He says that the Gramm-Leach-Bliley Act already places significant restrictions on the use of Social Security numbers.
“No further regulation of the industry is needed,” he says.
Moreover, Pitts says, S. 848 is self-defeating.
Social Security numbers, he says, provide the best identifier that financial institutions can use to determine whether a person is who he says he is.
“Without access to this unique identifier, crimes like identity theft, fraud and money laundering would be more rampant,” Pitts says.
FSCC members include the American Insurance Association, the American Council of Life Insurers, the American Bankers Association and the Securities Industry Association, all of Washington.