NAHU Warns Agents On Privacy

The financial privacy law applies to financial institutions, and it "clearly defines producers as financial institutions," Waltman said.

Both the health and the financial privacy standards require companies to notify customers about their privacy rights.

When companies are protecting health information, they must persuade customers to "opt in" to any information-sharing arrangements. When financial institutions are protecting financial information, they can require customers to "opt out" of information-sharing arrangements, speakers said.

Financial institutions do not have to get customers to sign opt-out forms to share financial information for purposes such as handling transactions clients have requested, preventing fraud, or meeting insurance commissioners requests for information, Waltman said.

Because each state must develop its own guidelines for implementing the financial privacy rules, multistate financial institutions may find themselves struggling to comply with many different privacy standards, Waltman said.

Some insurance commissioners, for example, want to exempt normal insurance agencies from the rules requiring regular privacy disclosure mailings, but other commissioners do not want to exempt agencies, Waltman reported.

NAHU and its legal advisors have developed a guide that offers descriptions of each states financial privacy standards.

For now, NAHU is recommending that agents in all states avoid sharing information about customers for non-business purposes. It is also recommending that agents send annual privacy disclosure notices to customers; send new notices whenever privacy policies change; keep careful records of disclosure mailings; and guard against sharing protected financial information except when customers have signed the necessary release forms.

Waltman suggested that agents might be able to get some benefit for themselves from the disclosure mailings by including marketing literature along with the privacy disclosure notices.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 13, 2001. Copyright 2001 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.

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