IIANJ Expresses Concerns over Proposed Consumer Privacy Regs

December 30, 2003

The Independent Insurance Agents of New Jersey recently submitted comments to the New Jersey Department of Banking and Insurance (DOBI) concerning proposed regulations that outline minimum standards for financial institutions, including independent insurance agents, for safeguarding customer information.

The IIANJ said that while it “supports the concept and importance of safeguarding customer information, and members work to protect that data,” it is “concerned with several of the requirements as proposed by the DOBI.”

The bulletin noted that, “First, IIANJ members use standard agency management and quoting systems that store customer information. IIANJ is concerned that the regulation, as proposed, requires that agencies ‘ensure’ that these systems are protected from both internal and external threats or hazards to the security or integrity of the customer information.” It said that while its members “can take steps to protect this information at the end-user level, IIANJ members do not have the ability to customize these programs.”

A second concern involves the requirement that all licensees “exercise due diligence in selecting service providers” and requires those providers to “implement appropriate measures to meet the security information program levels to meet the regulation.” The IIANJ urged the Department to “recognize that independent agencies are small businesses and should not be required to meet the same level of standards as the insurance companies with whom they may contract.

It noted that “IIANJ members already work to protect the customer information that they maintain.” IIANJ supports protecting this data but at a level that is attainable at a reasonable cost to a small business.

“IIANJ has been working with its members on the provisions of the Gramm-Leach-Bliley Act pertaining to privacy issues and safeguarding customer information through an Information Security Program”, stated Jeanne Heisler, an independent agent and legislative agent for IIANJ. “We will continue to provide guidance in this area but it must be recognized that our members are small businesses which rely on standard technology programs offered by a limited number of insurance software vendors. Standards for independent agencies must fall within the framework of available technology.”

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