Insurers Hit U.S. Internet Privacy Proposal

By Steven Brostoff, Washington Editor

NU Online News Service, May 16, 1:48 p.m. EST, Washington?Industry groups are blasting an Internet privacy bill approved today by the Senate Commerce Committee, promising to continue the fight to kill it.

"The legitimate e-commerce businesses being developed by insurers and others will be immediately placed at a competitive disadvantage if this legislation become law," said John Savercool, vice president of federal affairs for the Washington-based American Insurance Association.

"It will halt or significantly slow the flow of online insurance activity between businesses and consumers that has been increasing in recent years," he added.

Jack Dolan, a representative of the Washington-based American Council of Life Insurers, said that many consumers want to buy financial services products, such as life insurance, online. This legislation, he said, would frustrate consumers.

The bill, S. 2201, is sponsored by Committee Chairman Ernest F. Hollings, D-S.C. It was approved by a 15-8 vote. However, due to technical parliamentary reasons, a second vote will be necessary before S. 2201 can go to the floor of the Senate.

Under the legislation, Internet service providers or operators of commercial Web sites would be barred from collecting or disclosing personally identifiable information of a user without clear and conspicuous notice, including their right to opt out.

Providers and Web-site operators would have to obtain consent for the collection and disclosure of certain "sensitive" information, such as health, race, political party, religion, sexual orientation, social security number or financial information.

In addition, the legislation would allow private parties to file lawsuits against providers and Web-site operators for violations of the legislation.

Jim Pitts, executive director of the Washington-based Financial Services Coordinating Committee, said S. 2201 would open the floodgates to a tide of frivolous lawsuits that would curb e-commerce and result in increased costs for consumers.

Moreover, he said, the legislation would have a disproportionate impact on financial services firms because it does not include exceptions for normal business operations that are at the core of providing financial services.

Members of the FSCC include AIA, ACLI, the American Bankers Association and the Securities Industry Association.

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Insurers Hit U.S. Internet Privacy Proposal

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