Privacy Watchers React To California Draft

Pluses that Sorich cites include a change to the definition of customer to make it clearer that it reflects an ongoing relationship. Annual privacy notices would be sent to those customers with an ongoing relationship, he explains.

The time frame for allowing customers to opt out of sharing of personal information was changed to 30 days from 45 days and is now more consistent with a privacy model, Privacy of Consumer Financial and Health Information model regulation, adopted by the National Association of Insurance Commissioners, Sorich says.

But there are other areas in the draft that still need to be addressed, Sorich adds. For example, the issue of providing an opt-out notice to customers if an agent or broker shops a policy for a better policy is not addressed, he continues.

Sorich also says that an article in the draft addressing safeguarding of private information by carriers should be held until it is evident what action the NAIC is going to take. Currently, the NAIC, based in Kansas City, Mo., is working on how private information should be safeguarded.

An important issue concerns the inclusion of workers compensation and conceivably all commercial insurance in the draft regulation, according to Rey Becker, vice president-property-casualty, with the Alliance of American Insurers, Downers Grove, Ill.

Additionally, he adds, the elimination of the word "nonpublic" in the definition of nonpublic personal information covered in the language of the regulation is another concern. That is not the way that the issue is approached in Gramm-Leach Bliley or at the NAIC, Becker continues.

Reproduced from National Underwriter Life & Health/Financial Services Edition, June 3, 2002. Copyright 2002 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.