AAI Opposes Senate Version of Online Privacy Bill

May 15, 2002

The Alliance of American Insurers expressed its opposition to the online privacy bill scheduled for markup on May 16 in the U.S. Senate Commerce, Science and Transportation Committee.

Sponsored by Senate Commerce Committee Chairman Ernest F. Hollings (D-SC), the Online Personal Privacy Act (S2201) pre-empts state privacy statutes, requiring online businesses to adhere to stricter privacy regulations than traditional businesses.

“Senator Hollings is reinventing the wheel,” Kenneth Schloman, Alliance Washington Counsel, commented. “His bill would overturn the privacy constraints in Gramm-Leach-Bliley and the Health Insurance Portability and Accountability Act before we have sufficient information on how well these provisions have functioned.”

Schloman added that, “as drafted, this bill would prevent the flow of information needed for our economy to function efficiently. For example, under this bill’s provisions, an individual could prohibit an auto insurer from obtaining his driving record from the state department of motor vehicles via the Internet. That would void normal business activity now permitted under the Driver’s Privacy Protection Act. Similarly, a workers compensation insurer couldn’t get information indicating a pre-existing condition that would affect treatment and return to work.

“Online insurance companies and other businesses would be held to a stricter standard than traditional businesses–both in the information collected and the way in which it could be used. These multiple standards would lead to a regulatory nightmare.”

Earlier in May in the U.S. House of Representatives, Commerce, Trade and Consumer Protection Subcommittee Chairman Cliff Stearns (R-FL), introduced similar but less sweeping legislation. The Consumer Privacy Protection Act (HR 4678) offers privacy protections only in areas not already addressed by either the Gramm-Leach-Bliley Act or the Health Insurance Portability and Accountability Act.

“In stark contrast, the House bill covers only the areas in which Congress has not yet acted. This is a more useful and appropriate approach,” Schloman concluded.

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