The day I started working on this article was the day I received the fifth privacy notice from my insurance company. (No kidding-I have five different policies with the same company, and each one apparently generated its own notice.) We can all thank Congressmen Phil Gramm, Jim Leach, and Tom Bliley for sponsoring the Financial Services Modernization Act that required these notices (the "GLB" act). There is other legislation for insurers in the life and health arenas to contend with-namely, the Health Insurance Portability and Accountability Act (HIPAA; see August TD). And can you say "Patients' Bill of Rights?"

So one thing is certain-while the GLB-mandated notices have all been mailed, the fallout from privacy issues is just beginning. Insureds will be getting riled up about data privacy, and that's a concern for an industry that makes its living from information. In today's climate, how can insurers mine their customer data to do what they need to do to stay in business?

What Can You Know?

First of all, let's establish some context-we're talking about doing business in the United States only. Granted, insurance is a global industry, but there simply isn't the space available in a year's worth of issues to cover what you need to do to ensure compliance with the ever-changing privacy standards of every country. Suffice it to say you'll have to comply with the policies of the toughest host country, and it's up to you and your legal department to figure out what those are.

The good news:You're still allowed to use customer information to conduct the business of insurance. (See the sidebar, "The Very Basics of Privacy Law.") You can gather customer information from your own application data, third party sources, and transactional experience, then mine those data to your heart's content. "In terms of analysis and data mining, most of the companies have not expressed any concerns or reservations to us in terms of privacy," said Ron Exler, director of research at Robert Frances Group, an IT business advisory service. "They believe that under the regulations as they exist that they have a right to do that. It's part of the benefit to them and the consumer to bring some of that information together and know the customer better."