The Ohio Department of Insurance’s recent “data call” for life settlement and sensitive policyholder information was anti-consumer, and it would have put the department in violation of own mission. That’s bad for business as well as consumers.
If implemented, the data call could have resulted in making public considerable personal information about individual life policyholders who have sold their policies in settlement transactions. It might have also spurred other states to follow suit, opening up a private information free-for-all. Identity theft and worse may have ensued, in Ohio and elsewhere.
That’s bad for business, because it would undermine customer confidence in entering settlement transactions that would be in the customers’ best interests.
It is good that the DOI has now halted its decision to collect that “data.”
Such data collection would not have been a step forward in protecting consumers, as the DOI is charged to do under its very own mission statement. As written on the Ohio DOI website , that mission is to “provide consumer protection through education and fair but vigilant regulation while promoting a stable and competitive environment for insurers.”
Why would the data call not have protected consumers? Because the nature of the information sought, on completed settlements, concerns not only details about settlement providers and transactions. It also seeks uniquely personal data about insureds involved in these transactions.
The personal data sought includes the name and addresses of the insured, date of birth, whether chronically or terminally ill, and life expectancy, along with information about the original life policy, including the time elapsed between the purchase of the policy and its sale, writes Trevor Thomas in this month’s Settlement Watch Feature article (March 2009).
If the DOI went ahead and gathered that information, it is very likely that it would have become public information or subject to public information requests and all the privacy issues that such requests entail. This could happen because most information at the DOI is considered public information.
Doubt that? Check out the privacy statement on the Ohio DOI’s website. Among other things, it states that, “subject to certain statutory exceptions, most documents and records maintained by the Department, including but not limited to electronic data, are public records under Ohio law” (emphasis added). See the full statement here.
The key words to note are that that the department treats “most documents and records,” subject to certain statutory exceptions, as public records.
There is no indication that the data call information would be subject to statutory exception, so one has to assume that this information would be open to prying eyes.
It is hard to imagine that people who sell personal life insurance policies would want to have their names, addresses, life expectancies, and other personal data available for viewing by unknown members of the public. Even if that didn’t happen, the fact that it could happen would be unnerving. Far from feeling protected by the state insurance department, citizens would feel exposed to the danger of who-knows-what use of their personal information. Suddenly, doing a life settlement would appear less attractive.
We understand that the DOI will now review its decision and consult with others about its data needs. That’s what needs to be done.
The staff should talk not only with members of the settlement and life insurance industries, other regulators, privacy specialists and some attorneys, but also with consumers. The department should look at all the issues related to such information gathering, to ensure that any data collection that may ultimately be implemented adheres to the department’s own mission and to related privacy standards and statutes, including the Health Insurance Portability and Accountability Act of 1996.
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–Linda Koco, Managing Editor, e-Publications
National Underwriter Life & Health