AIA Calls on NAIC Privacy Issues Working Group to Remove Proposed Amendment to Model Regulation

July 10, 2002

The American Insurance Association (AIA) is calling on the National Association of Insurance Commissioners (NAIC) Privacy Issues Working Group to withdraw a proposed amendment to the model privacy regulation.

The proposed amendment would require insurers to provide privacy notices to workers’ compensation policyholders. In addition to opposing the specific amendment, AIA is also concerned that any amendments by the working group will complicate compliance efforts.

“The Working Group function of issuing interpretive questions and answers (“Q&A’s”) arose from a need to combat growing disparities in privacy implementation and interpretation among the 55 insurance regulatory jurisdictions. AIA and others feared that continuing non-uniformity of privacy regulation among these jurisdictions would unnecessarily complicate industry compliance efforts and raise costs without affording insurance consumers material benefit. We certainly did not expect that the Model Regulation would be modified or amended in any way,” commented Stephen Zielezienski, AIA assistant general counsel, in a letter to the NAIC.

“More importantly, this post-hoc amendatory proposal will require all licensees to reevaluate or revise their privacy compliance programs. For AIA and its member companies, this action is particularly frustrating as it comes many months after unanimous NAIC adoption of the Model Regulation, after adoption of that Model language by most states, and after insurers have already invested millions of dollars in compliance programs,” added Zielezienski. “We fear that Working Group amendments in this area will set a precedent for new changes to the Model each time regulators take a view on Model interpretation that differs from the industry position, even where that position is supported by clear language.”

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