Calif. Judge Gives Split Decision on Local Privacy Ordinances:
A split decision issued recently by a federal judge in California in a case related to local privacy ordinances is a case of good news/bad news for insurers and other financial services companies, according to the Alliance of American Insurers. The decision rendered by Judge Claudia Wilken of the U.S. District Court for Northern California, came in the case of Bank of America v. Daly City. The case challenges financial privacy opt-in ordinances passed by several San Francisco Bay area local governments that have attempted to regulate sharing of consumer information, exceeding the privacy provisions of the federal Gramm-Leach-Bliley (GLB) Act. The positive part of Judge Wilken's 23-page ruling strikes down the attempts to enforce opt-in requirements for the sharing of consumer information between and among affiliated financial institutions. However, she upheld the restrictions upon disclosures to non-affiliated third parties. "While striking down the affiliate-sharing provisions of the ordinances was a very positive development for insurers, perhaps the most disconcerting aspect of the judge's ruling is her statement that 'states and local governments are free to enact law affording some protection to consumer privacy greater than that provided by federal law,'" said Rey Becker, Alliance vice president of property/casualty. "This could spur enactment of hundreds of local ordinances in California alone. It is absurd to use such a balkanized approach to regulate a multi-national industry." Becker added that, "the insurance industry has been complying with California's insurance privacy law for more than 20 years. It makes no sense to reinvent the wheel." Enforcement of the ordinances was stayed for 60 days. The ordinances in question are in place in Daly City, Alameda County, Contra Costa County, and San Mateo County.
Commonwealth Court Grants PA. Dept.'s Petition for Legion, Villanova Companies
Pennsylvania Insurance Commissioner M. Diane Koken announced recently that Commonwealth Court has granted final Orders of Liquidation for the Legion and Villanova Insurance Companies. The liquidation orders became effective July 28, 2003, at 12:01 a.m. "These companies are now in liquidation. In August 2002, we determined that Legion did not have sufficient liquid assets available to pay its obligations as they came due," Commissioner Koken said. "At that time, we petitioned Commonwealth Court for an Order of Liquidation. We are relieved to finally have the ability to move forward with liquidation. Many policyholders and other claimants were being impacted because they did not have access to state guaranty association coverage. The Court's liquidation orders will now begin to trigger the state guaranty associations to pay policyholder claims to the maximum levels provided by law. In addition, by law, all Legion and Villanova policies will terminate within 30 days of this action. While the Court has concluded that Legion and Villanova are insolvent and should be liquidated, there are elements of the Orders that the Department will be appealing. Our foremost responsibility now is to take the necessary steps for the orderly liquidation of the companies." Legion Insurance Company and Villanova Insurance Company were both headquartered in Philadelphia and ultimately owned by Mutual Risk Management Ltd., a publicly held company organized in Bermuda. The Legion insurance group also included an Illinois surplus lines insurer, Legion Indemnity, which was liquidated in April 2003. Legion and Villanova transacted insurance business in all 50 states.
