Insurers Bridling Over D.C. Privacy Exam Project

The idea originated when PWC approached the department and said it had developed a software program that could address uniformity and market conduct issues, Sheppard explains. The tab for the work will be $30,000 per exam, he adds. The total would be $3 million.

Sheppard says the exams “havent been very popular with a lot of companies” because they say exams already are conducted by certain states.

For example, Iowa sent out its own privacy survey to companies at the end of June.

Sheppard says it also has been noted that some states have chosen not to participate in this effort and that this point has been used to raise questions about whether there is support for the project.

But, Sheppard adds, for certain jurisdictions, a lot of funding comes from market conduct exams which may be one reason why those jurisdictions chose not to participate in the process.

Insurers are raising questions about the project. The Alliance of American Insurers, Downers Grove, Ill., and the National Association of Independent Insurers, Des Plaines, Ill., are among the trade groups registering concern.

Among the concerns is how much reciprocity there will be, says Lenore Marema, vice president-legal and regulatory affairs, with the Alliance. The concern, she explains, is that if large states conduct their own exams and smaller states that conduct few exams participate, there will not be a test of reciprocity.

Twelve states have signed reciprocity agreements for the project with one verbal commitment, according to the Alliance. An anticipated eight states probably will sign the agreement, 18 are undecided and 11 will not participate, the Alliance says.

Reproduced from National Underwriter Life & Health/Financial Services Edition, August 18, 2003. Copyright 2003 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.