NAIC At Work On Privacy Issues

By Jim Connolly, NU Life-Health Senor Editor

NU Online News Service, June 21, 2:27 p.m. EST?A year after insurers began conforming to new consumer privacy guidelines, regulators and companies have a continuing concern about implementation and modification of privacy rules.

Privacy guidelines that put insurers in compliance with requirements under the Gramm-Leach-Bliley Act of 1999 became effective a year ago, on July 1, 2001.

Amendments are being considered for the Privacy of Consumer Financial and Health Information Regulation, a regulation adopted by the National Association of Insurance Commissioners in September 1999.

Additionally, regulators who attended the NAIC meeting in Philadelphia last week are discussing a privacy regulation developed by the Department of Health and Human Services and how it compares with the NAIC Health Information Privacy Model Act.

The issue was touched on by regulators, but no decisions have been made on a direction to take concerning HIPAA privacy.

Currently, 36 states have promulgated regulations based on the latest NAIC model while 13 states have laws based on the NAIC's Insurance Information and Privacy Protection Model Act, a model adopted in the early 1980s.

Regulators broached the amendments during a discussion at the privacy issues working group. During the discussion, insurers in the audience were assured the proposed amendments were clarifications and not changes to the existing model.

Among insurers, the concern was an amendment requiring a notice to covered individuals. The amendment (Section 9-A(b)) says providing a notice to covered individuals is optional unless the individual is an insurer's consumer or the individual requests a notice.

But, in a section addressing the definition of consumer, it states if an insurer provides notice to the plan sponsor or group policyholder or workers' compensation policyholder, and does not disclose individual nonpublic personal financial information to a nonaffiliated third party, individuals would not be consumers because they would be covered by the group notice.

Insurers are assessing these amendments.

The American Council of Life Insurers, Washington, is still reviewing the working group proposals, according to Jack Dolan, an ACLI spokesman.

Joseph Luchok speaking for the Health Insurance Association of America in Washington, said the group opposes reopening the health privacy model because it does not want to see a model already in place in a number of states revisited.

On the amendments to the 1999 NAIC model, Mr. Luchok said, "we agree with the intent but we have not looked at the precise language."

Property-casualty trade groups raised concerns that new requirements are being created.

Stephen Zielezienski, assistant general counsel with the American Insurance Association in Washington, said under the new language, if a workers' comp claimant is determined to be a consumer, then notice to the workers' comp policyholder is not optional. If notice to the policyholder is not provided, then the workers' comp claimant is considered a consumer and a notice must be provided, he explained. "It is backward logic."

The concern is that a worker' comp claimant could be considered a consumer and would have to be provided a privacy notice, according to Michael Koziol, senior director and counsel with the National Association of Independent Insurers, Des Plaines, Ill.

"This is not a clarification," but goes beyond GLB, says Lenore Marema, vice president-legal and regulatory affairs with the Alliance of American Insurers, Downers Grove, Ill. This would make it mandatory to provide individuals with notices if they were requested, she added.

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NAIC At Work On Privacy Issues

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