UPDATE: Consumer Privacy Study Rates P-Cs

UPDATE: Consumer Privacy Study Rates P-Cs

NU Online News Service, Feb. 25, 9:53 a.m. EST?A California consumer group, in a report grading the privacy policies of 16 large insurers in the state, has given a passing grade to all but two.[@@]

Property-casualty insurers were found in both the highest grade and failure listings from the Consumer Federation of California. The highest grade--an A-plus--went to Pacific Life of Newport Beach, Calif.

The p-c carriers given an A-minus were Fireman's Fund of Novato, Calif., 21^st Century of Woodland Hills, Calif., and State Farm of Bloomington, Ill.

Under the Foundation's demanding standards, simply meeting the privacy requirements of the federal Gramm-Leach-Bliley Act were not enough to get a passing grade, let alone a high mark. Companies were expected to voluntarily take additional steps to guard consumer privacy.

Firms that merely obeyed the minimal privacy requirements of federal law received failing grades, the foundation said.

Under these higher standards, American International Group in New York and Zurich North America of Schaumburg, Ill.--neither of which responded to a foundation survey sent to them asking about their policies--were both flunked with an "F."

A spokesman for Zurich responded that "any firm that completed the survey for the CFC received the minimum grade of a C, even if their privacy policy was otherwise deficient in all ways. In other words, if we take the CFC's grading system at face value, a company that completely flouted the privacy laws but still responded to the CFC survey would get a grade of C."

He added that the CFC's grading system was not made known to companies at the time CFC requested input from the companies. Zurich, he said, has "confidence in the privacy standards and practices we have in place. Having said that, we are always looking for ways to enhance them."

Fireman's trumpeted the results today. Bill Paukovitz, the company's chief privacy and security officer, announced the study is "independent validation of Fireman's Fund's commitment to protect the privacy of our customers, our agents and our employees."

He said the company does not share personal information with non-affiliated companies for marketing purposes because "we believe that privacy is an inherent consumer right. We respect those rights and will do whatever we can to protect our customers from identity theft, from the sharing and selling of protected data, and from deceptive marketing practices."

Fireman's provides homeowners insurance and commercial insurance to middle-market businesses in the state.

CFC gave low or failing grades to two thirds of the 55 financial institutions.

Richard Holober, executive director of the foundation, in a message with the report, said the A-graded companies demonstrated that "respecting consumer privacy choices is not at odds with running a profitable business."

The group said most of its information was found in public sources. In surveying 55 companies, it compiled information on only 51. Of these, it said only 24 responded to a survey and only 12 of these provided useful information.

Firms received positive grades for voluntarily not sharing information about consumers with affiliated businesses or voluntarily giving consumers the means to limit information sharing.

The report is available on the foundation Web site at http://www.consumerfedofca.org .