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Insurance Industry Seeks Simple, Uniform Privacy Compliance Program
Reproduced with permission from CCH Focus published and copyrighted by
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State insurance regulators charged with developing a plan to have companies comply with new privacy standards should make sure the plan is simple, uniform and does not unduly burden insurers, according to an official of the National Association of Mutual Insurance Companies.
NAMIC Market Regulation Manager David Reddick was commenting on a March 27 decision by the National Association of Insurance Commissioners Market Conduct & Consumer Affairs Committee to form a subgroup to develop a compliance plan. Kevin Rampe of the New York Insurance Department, whose agency already has issued a privacy questionnaire, was named chair of the subgroup with representation from Kansas, Missouri and Oregon.
"The New York approach probably works well for them, but it is not a plan that is right for other states," Reddick contended. "New York already has promulgated its privacy rule and companies know what they must do to comply by July 1. This is not the case across the country, however, where some states may not have their privacy regulation in place by July 1."
Rather than a pre-July 1 questionnaire, Reddick said each state should issue a directive to its domestic companies explaining the status of its privacy rule and any expectations the department has for certain compliance issues, such as verifying when privacy statements were mailed to existing customers.
"Some states may not have their privacy rule completed before July 1, so insurers need to know that they will be subject to the provisions in Title V of the Gramm-Leach-Bliley Act (GLBA)," Reddick said. "Obviously, this situation will vary from state to state."
"If regulators want to conduct a survey, it should be modeled after the post-Y2K survey process, where individual states surveyed their domestic industry and then reported the results to other state regulators," Reddick said. "Any questionnaire should be limited to a few questions and probably should include a question on how many customers select the 'opt-out' option."
Last month, Rep. John Dingell asked the General Accounting Office for a status report on how states were complying with the privacy requirement in Title V of the Gramm-Leach-Bliley Act.
Regulators should not be intimidated into thinking that they should develop an elaborate compliance program just because the GAO is looking over their shoulder," Reddick said. "Instead, they should develop a compliance process that is simple, uniform and that does not impose undue burdens on insurers."
In order to assist in the compliance effort, NAMIC released a comprehensive privacy manual in November 2000. "The manual provides NAMIC's view of issues companies should consider and notes that the necessary first step is to conduct a privacy audit to determine what nonpublic information companies collect and how they use and disclose it," said Larry Forrester, NAMIC's president. More information is available on NAMIC's website, www.namic.org.
CCH now offers a Derivatives Regulation Law Reporter to keep you informed of developments involving the regulation of this rapidly growing area. Please call a CCH representative at 800-449-6435 for more information.
Source: CCH Focus
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