Message to Agents: Be Proactive on Privacy

If you’re like most consumers, you get lots of mail from banks—banks that already call you a customer and those that consider you a prospect. “Hey, for a low rate of 2.9 percent, you can go into even deeper debt than you already are! Just pay it off in six months because after that, the rate goes to 49.9 percent!”

Lately you’re getting another kind of mail from banks—privacy notices. Financial institutions are under a July 1 deadline set by the Gramm-Leach-Bliley Financial Services Modernization Act (GLBA) to notify you how they intend to use personal information they’ve collected about you.

The financial institutions could (read: will) share your personal information with other marketers unless you take some action—phone a call center, or e-mail or send a note back—saying you don’t want that information shared with other institutions. This so-called “opt-out” feature is under fire in the states and Congress.

Opponents prefer “opt-in,” which means nobody will use your information unless you tell them they can. A number of states are considering legislation giving consumers more options on how, or whether, their information will be used.

As bothersome as it is to decipher the receiving end of privacy notices, it must be even worse to design the technology, segment customers, produce the forms, mail them out and track responses. Nobody wants to screw up, so there are lots of compliance officers and consultants involved. GLBA could stand for the “Give Lawyers Bucks Act.”

Insurance companies will also be notifying customers by July 1. And while State Farm agents can rely on the Mother Ship for mailing and tracking privacy information, independent agents and brokers must figure this out for their own firm. GLBA requires those notices to go out by July 1 as well—and once a year after that.

When you stop and think about it, agents and brokers often do know quite a bit about their customers, and share information with all sorts of other providers of services.

The Independent Insurance Agents of America (IIAA) offers a free privacy kit to walk members through privacy notification and opt-out rights. “This is a living, breathing document that is constantly being changed to reflect federal and state law,” said Jeff Myers, public affairs vice president for IIAA.

The Insurance Agent & Broker’s Guide to Privacy, available on the member-only section of IIAA’s website at www.independentagent.com, helps agents with setting up procedures for customer privacy and handling communications with clients. The guide says “every insurance agency must provide all ‘customers’ with an initial and annual notice that describes the manner in which their nonpublic personal information is collected, maintained and disseminated. Every individual having dealings with an insurance agency is considered a ‘consumer,’ but only those consumers with specific or ongoing relationships with the insurance agency are ‘customers.'” Got that?

Start by asking your companies to share samples of the materials they’ve sent, or will send, to your customers. Take those and make them better. There are two distinct relationships that the customer has—one is with the insurance company, the other is with the independent agent or broker. The privacy notice mailing is an opportunity for agents to show that they have an investment in their customer relationships and that there are a lot more things they can do for those customers.

But there’s another important reason why agents should be proactive. Sources say it’s best to set the tone for your own firm—not just allow the company to be the sole voice. By staying silent, you may not have as much of a say in the future as to how your customers’ information will be used.

Sure, complying with GLBA sounds like complying with the IRS, but look at this as an opportunity to talk with your customers. Trust me—our privacy notice can look a heck of a lot more user-friendly than the stuff your banks or carriers are sending.

I just received a “We Respect Your Privacy” notification from Discover Card. (Banks sure love capital letters, don’t they?) The legalese was part of an apparent junk mailing of several flyers that fell out of the envelope as I was feeding the whole thing into a shredder.

Also in there was a pitch for “Instant Savings Of Up To 10 Percent To 20 Percent Plus An Additional $15 Off – But Like We Said It’s Only ‘Up To’ So It Won’t Be That Much Anyway” off a Budget car rental.

Another discount was in there for FTD.com. I’m feeling warm and fuzzy all over. (Insert loud shredder noise here.)

Peter van Aartrijk Jr. owns a communications firm specializing in the independent agent distribution channel. To comment on this column, send e-mail to ijwest@insurancejournal.com.

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