NAMIC Says Opt-Out Privacy Notice Should Have Primacy

January 27, 2003

An opt-out privacy standard should be primary in all insurance jurisdictions because it respects consumer choice, according to the National Association of Mutual Insurance Companies (NAMIC) Board of Directors.

“The opt-out standard respects consumer choice about the use of nonpublic personal information without imposing an overly restrictive regulatory scheme that makes such choice less likely,” said Peter Bisbecos, NAMIC’s legislative and regulatory counsel.

NAMIC also advocates more readable privacy notices, if legally adequate language can be developed for required phrases. Believing that each regulator should address concerns about the readability of privacy notices on a case-by-case basis, NAMIC recommends that the National Association of Insurance Commissioners (NAIC) disband the Privacy Notice Group.

“Self-styled consumer advocacy groups continue to argue to the NAIC that the complex wording in privacy notices is the cause of the ‘low’ opt-out rate, and they flatly reject the notion that people are making intelligent choices,” said Bisbecos. “While privacy notices may be difficult to read, they must track with the Gramm Leach Bliley Act’s (GLBA) statutory language; and there is no simple substitute for GLBA phrases such as ‘non-public personal information,'” said Bisbecos.

“Credible survey results prove that privacy is not an overwhelming concern. When people are asked if privacy is a major concern, they do respond affirmatively in large numbers,” said Bisbecos. “However, when survey answers are not suggested, privacy does not make the list. Further, individual behavior belies the notion that privacy is an overwhelming concern. An excellent example of this is Internet purchasing trends. People are concerned about the security of their personal information on the Internet, yet Internet shopping continues to increase at astonishing rates.”

Addressing privacy concerns in a way that respects an individual’s right to make choices does not lend itself to simple or repressive solutions. The opt-out standard strikes a balance by protecting nonpublic personal information without denying others the benefits of information sharing.

“Many people believed that the privacy debate ended with the passage and implementation of the GLBA, it is now clear that the GLBA was only the starting line,” said Bisbecos.

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