Insurers Bridling Over D.C. Privacy Exam Project

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Insurers are bridling at a data-gathering project on privacy policies that is being spearheaded by the insurance division of the District of Columbias department of insurance and securities regulation.

One hundred insurance groups will be part of the market conduct examination effort being handled by PriceWaterhouseCoopers for the D.C. department, Dana Sheppard, a spokesman confirms.

The exams will be done in four stages of 25 companies apiece. The companies selected for the initial round include 10 life companies, 10 property-casualty companies and five health companies.

The first round went out on Aug. 4, to large insurance groups including American International Group, MetLife Inc., and Prudential Financial, according to Sheppard.

Questions posed include how information is used and how it is shared with affiliates, compliance systems in place, and how companies are complying with opt-in and opt-out requirements, he continues.

Companies have 60 days to respond to the questions, he adds. The second round will go out just after Labor Day and the last group sometime in late October or November, Sheppard says.

If substantial problems are found, more work will be done, he continues.

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.