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Privacy watchers are offering initial reaction to the latest draft of a privacy regulation being developed by the California insurance department.

The draft, released on May 23, seeks to establish a guideline for consumer privacy to meet requirements in the Gramm-Leach-Bliley Act of 1999.

Tena Friery, research director with the Privacy Rights Clearinghouse, San Diego, says the draft regulation should offer protections that are consistent with Gramm-Leach-Bliley.

Consistency is also a high priority for the American Council of Life Insurers, Washington, according to John Mangan, director of state relations. A chief concern, he says, is uniformity among states. “We are very much concerned that there not be separate state notices.”

Sam Sorich, senior vice president and general counsel with the National Association of Independent Insurers in Des Plaines, Ill., says the latest draft consists of revisions that are both good and bad.

Pluses that Sorich cites include a change to the definition of customer to make it clearer that it reflects an ongoing relationship. Annual privacy notices would be sent to those customers with an ongoing relationship, he explains.

The time frame for allowing customers to opt out of sharing of personal information was changed to 30 days from 45 days and is now more consistent with a privacy model, Privacy of Consumer Financial and Health Information model regulation, adopted by the National Association of Insurance Commissioners, Sorich says.

But there are other areas in the draft that still need to be addressed, Sorich adds. For example, the issue of providing an opt-out notice to customers if an agent or broker shops a policy for a better policy is not addressed, he continues.

Sorich also says that an article in the draft addressing safeguarding of private information by carriers should be held until it is evident what action the NAIC is going to take. Currently, the NAIC, based in Kansas City, Mo., is working on how private information should be safeguarded.

An important issue concerns the inclusion of workers compensation and conceivably all commercial insurance in the draft regulation, according to Rey Becker, vice president-property-casualty, with the Alliance of American Insurers, Downers Grove, Ill.

Additionally, he adds, the elimination of the word “nonpublic” in the definition of nonpublic personal information covered in the language of the regulation is another concern. That is not the way that the issue is approached in Gramm-Leach Bliley or at the NAIC, Becker continues.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 3, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.