NAIC Adds Privacy Provision For Comp Insurers

NU Online News Service, Dec. 9, 4:27 p.m. EST?The National Association of Insurance Commissioners Executive Committee has voted to include workers' compensation insurers in a change to a model privacy regulation.

In reaction, the American Insurance Association said it was "disappointed" by the decision.

The amendment adopted by the NAIC Executive Committee, at the group's meeting in San Diego, requires insurers to provide privacy notices to workers' compensation policyholders, which was not required under the original model regulation, AIA said.

"The model privacy regulation was adopted almost two years ago by the NAIC. AIA and many others have worked hard since then to seek uniformity through the jurisdiction-by-jurisdiction promulgation of the model. In addition, making changes at this late date will require insurers to reevaluate or revise their privacy compliance programs after they have already invested millions of dollars to conform to the original model regulation," said Paul Blume, AIA vice president in the Midwest region.

"Frankly, we are concerned that yesterday's action could set a precedent for making substantial changes to NAIC model laws or regulations after they have been adopted by the NAIC, promulgated or enacted by the states, and implemented by carriers," Mr. Blume said.

"In this particular case, the proposed amendment does not 'clarify' the model, but sets an entirely new privacy standard that extends beyond the parameters of the original model by mandating notice to workers' compensation policyholders," he added.

"Workers' compensation insurance, as a commercial line of insurance, poses a unique situation that should not be resolved by requiring workers' compensation insurers to give policyholders privacy notices, although insurers could still exercise the option to do so," explained Mr. Blume.

"One of the things the NAIC and carriers have been working hard to achieve during the past few years is uniformity in state regulatory policies. Yesterday's action clearly jeopardizes uniformity for privacy regulations, and may erode insurer confidence in the regulatory process," concluded Mr. Blume.

The American Insurance Association represents 412 major insurance companies that provide all lines of property and casualty insurance and write more than $87 billion annually in premiums.

Special Reports /

NAIC Adds Privacy Provision For Comp Insurers

Related Stories

Recommended For You