NU Online News Service, June 19, 2:45 p.m. — Philadelphia

Regulators here recently for the summer meeting of the National Association of Insurance Commissioners, Kansas City, Mo., talked about the possibility of amending the Privacy of Consumer Financial and Health Information Regulation, a model regulation that the NAIC adopted in 1999.

Regulators assured insurance industry representatives in the audience at a meeting of the privacy issues working group that the proposed amendments would be clarifications to the existing model, not changes.

But the industry representatives expressed concern about a proposed amendment that would require insurers to send notices to individuals insured by a group policy.

The amendment, Section 9-A(b), says that providing a notice to covered individuals is optional, unless the individual is an insurer’s consumer or the individual requests a notice.

In a section addressing the definition of consumer, the text of the proposed amendment states that, if an insurer provides notice to the plan sponsor, or to the group policyholder or workers’ compensation policyholder, and does not disclose individual, non-public personal financial information to a nonaffiliated third party, the individuals would be covered by the group notice and would not be defined as the insurer’s consumers.

Regulators at the NAIC meeting were also comparing the privacy regulation developed by the U.S. Department of Health and Human Services with the NAIC Health Information Privacy Model Act, and discussing the direction the NAIC should take.

Today, 36 states have promulgated regulations based on the latest NAIC model, and 13 states have laws based on the NAIC’s Insurance Information and Privacy Protection Model Act, a model adopted in the early 1980s.

Insurance trade groups are not yet expressing firm opinions about the proposed amendments to the NAIC’s 1999 financial privacy model.

The American Council of Life Insurers, Washington, is still reviewing the working group proposals, according to Jack Dolan, an ACLI spokesman.

The Health Insurance Association of America, Washington, is somewhat more positive about the idea of amending the 1999 NAIC model.

“We agree with the intent but we have not looked at the precise language,” HIAA spokesman Joseph Luchok said.