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Life Health > Life Insurance

Fingerprint Battle Continues

By Jim Connolly

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A life insurance producer group is supporting a proposed fingerprint collection program, but groups representing life insurers, property-casualty insurers and property-casualty producers are demanding changes.

The groups are reacting to a draft of the “Authorization for Criminal History Record Check Model Act,” which is under consideration by the Market Regulation & Consumer Affairs Committee of the National Association of Insurance Commissioners, Kansas City, Mo.

The model draft calls for the NAIC to control the fingerprint database, and it states that “fingerprints and necessary identification information sent by a state commissioner to the NAIC shall not be subject to a subpoena, other than one issued in a criminal action or investigation, and shall be confidential, and not used in a civil action.”

In 2002, the NAIC suggested that it and insurers could share control over a National Insurance Producer Registry that would be responsible for keeping fingerprints. But Andrew Beal, NAIC general counsel, recently said the NAIC decided that the confidential nature of the database requires that it be kept under NAIC authority.

The National Association of Insurance and Financial Advisors, Falls Church, Va., is supporting the advancement of the fingerprint model act.

The model would streamline the fingerprinting process for producers with “a printed once, then done approach,” and it would help state regulators weed out “bad apples,” by giving them access to Federal Bureau of Investigation criminal histories, says Michael Gerber, a vice president at NAIFA.

Some groups want the fingerprint database to include prints for insurance company officers and directors as well as producers.

To keep that concern from slowing advancement of the proposed model, NAIFA says the NAIC could start by setting up a database for producer fingerprints and separate out the officers-and-directors issue for further study.

Other groups are criticizing the proposed model.

Michael Lovendusky, an associate general counsel at the American Council of Life Insurers, Washington, has filed comments listing 10 reasons why any central depository should fall under the purview of a National Insurance Producer Registry rather than the NAIC.

NIPR control was agreed to in 2002, the NIPR would comply with the Fair Credit Reporting Act and state laws, fingerprint and repository costs would be kept low, and, fingerprint collection, storage and transmission are “not necessarily regulatory functions,” Lovendusky says.

The ACLI would be more comfortable with the criminal history record check of officers and directors if the central depository resides with the NIPR and not with the NAIC, Lovendusky says.

It is unclear whether the confidentiality provisions for the central depository discussed in the model will be enforceable, Lovendusky adds.

Property-casualty groups expressing concerns about the fingerprint model include the Property Casualty Insurers Association of America, Des Plaines, Ill.; the Independent Insurance Agents and Brokers of America, Alexandria, Va.; and the National Association of Mutual Insurance Companies, Indianapolis.

The PCI is questioning whether the NAIC can authorize the states to fingerprint insurance company officers and directors, and it says it would prefer to see insurers share control over the repository through an NIPR.

The IIABA says the proposed model program would be too costly for agents, and NAMIC says the fingerprint model conflicts with existing company licensing provisions.

Either the model should omit references to officers and directors, or the model should include a drafting note stating that the intent of the model is not to impose a new company licensing requirement in states where fingerprinting is not currently required for officers and directors, NAMIC Regulatory Counsel Marsha Harrison says in a written comment on the model.

The drafting note should clearly state that the portions of the model relating to officer and director fingerprinting are applicable only in those states where such a requirement currently exists, Harrison writes.

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