Since then, all but one state has adopted privacy standards that meet the requirements of GLB, according to the National Association of Insurance Commissioners. In that one state–Alaska–lawmakers and the state insurance regulator are still working on developing privacy legislation, the NAIC said.

However, as closely as the states have worked to create privacy legislation that meets GLB's standards, variety still abounds. Agent and broker association representatives caution that producers need to be familiar with their individual state's privacy requirements to avoid violating the law.

To protect themselves, producers should mail out privacy notifications each year, advised representatives at the Independent Insurance Agents & Brokers of America and the National Association of Professional Insurance Agents, both based in Alexandria, Va. The notices advise customers of the collection of personal information and how it would be used in the course of any insurance transaction.

“The simple way for agents to protect themselves is to distribute privacy notices,” advised Marianne Caulfield, association general counsel for IIABA.

Generally, the customary use of personal data for the purposes of the underwriting, renewal and maintenance of an insurance account is an accepted reason for sharing information, according to Patricia A. Borowski, senior vice president of PIA.

While insurance carriers and other financial institutions are obligated to meet the privacy demands of both federal and state regulators, an agent's concern is to meet the obligations of the state law. “If a carriers' privacy regulations are more complicated than the [agent's] business, then the company's rules should not be imposed,” Ms. Borowski said. “We tell our agents that they do not have to comply with all of GLB, only with their state insurance regulations.”

One area in which the privacy issue is coming under new scrutiny is health information. The new battleground is over the U.S. Department of Health and Human Services' development of proposed privacy rules pursuant to the Health Insurance Portability and Accountability Act, noted association representatives.

According to the HHS Web site, the act, which was signed into law in 1996, “is aimed at limiting exclusions for pre-existing medical conditions, prohibiting discrimination against employees and dependents based on their health status, guaranteeing availability of health insurance to small employers, and guaranteeing renewability of insurance to all employers regardless of size.”

The concern, noted Nicole Allen, director of government affairs for the Council of Insurance Agents and Brokers in Washington, is how the privacy provisions under HIPAA would affect producers' ability to shop around health programs for their clients. This would be of concern to p-c agents involved in employee benefit plans.

Essentially, the fear is that, should the final regulation bar the transmittal of personal data for underwriting purposes–essentially claims information–underwriters would not be able to price the plan, Ms. Allen pointed out.

The proposed regulations would curtail the “free flow” of information that producers need to shop a plan around or to add benefits for employees, she said. Unlike HHS, state regulators did understand the importance of this and permitted the exception, Ms. Allen noted.

She said the latest revisions, published in March, if not further revised, would make it “impossible to do business in the marketplace.”

Agent associations have expressed their concerns. Ms. Allen said members of CIAB have met with HHS representatives to lay out their concerns. HHS is expected to come out with its next ruling in the fall, she said.

According to HHS, most “covered entities” would have until April 14, 2003, to comply with the department's privacy regulations, and “certain small health plans” would have until April 14, 2004, to comply. (For more on the health data privacy issue, see Steven Brostoff's story on page 15.)

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, May 27 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.