Contact: Susan McKenna
Tel: 847.297.7800

FOR RELEASE ON RECEIPT

5/22/2000

NAIC: Privacy Protection Should Include Workers' Comp Claimants

KANSAS CITY, Mo. —The National Association of Insurance Commissioners (NAIC) opened a new chapter in the book of privacy today when they suggested that protections under the Gramm/Leach/Bliley Act should extend to workers' compensation claimants. Regulators discussed the idea on May 16th during pre-NAIC working group meetings that included a session on privacy protection under the new federal regulations released on May 12th.

At present, privacy protections under the Gramm/Leach/Bliley Act do not include commercial policyholders, including workers compensation insurance.

"At the heart of the issue is whether workers' compensation claimants should be included in a notification that their personal information could be given to a non-affiliated third party for marketing or other purposes," said Robyn Rowen, senior counsel for the National Association of Independent Insurers (NAII). "The definition of privacy protection written in the Act is 'protection for individuals who obtain financial products for household or personal purposes.'"

Regulators met in executive session during the meeting to explore the possibility of recommending an inclusion of commercial insurance under the new privacy regulations. They also considered other issues, including additional disclosure requirements. The NAII has advocated that the NAIC pursue guidelines that are consistent with Gramm/Leach/Bliley and the federal regulations to ensure uniformity and a level playing field.

The NAIC also seemed receptive to insurers' concerns about having sufficient time to alter systems and train employees to comply with the new guidelines.

At the meeting NAII presented its suggestions for insurer-specific language regarding property-casualty insurance customers under the privacy regulations. Some of those suggestions include:

· retaining an opt-out provision, which allows a policyholder to choose not to have private information released, as the preferred process;

· requiring notification regarding privacy rights to be included at the time the policyholder receives the policy;

· permitting electronic notes for consenting parties;

· establishing a compliance period similar to the federally regulated entities.

"Above all, NAII continues to support the NAIC's effort to promote state proposals on privacy that are consistent and uniform with the regulations were issued in mid-May," Rowen said.

The NAII, located in suburban Chicago, is the largest insurance trade association of its kind with over 650 members. Its members write 33 percent of the property-casualty insurance in the United States.