Financial privacy legislation swiftly passed the California Assembly Aug. 18 and the Senate Aug. 19, and Senate Bill 1 is expected to reach Gov. Gray Davis’ desk for his signature Aug. 20.
“Uniform privacy regulation throughout the country is extremely important for insurers that operate nationally to both minimize the costs of compliance and optimize benefits to consumers,” said Sam Sorich, president of the Association of California Insurance Companies (ACIC). “For any business that operates on a national scale, the enactment of a ‘California-only’ privacy regulatory scheme, as proposed in SB 1, would increase costs and would impose barriers on companies’ ability to provide a broad range of services to their customers.”
SB 1 also would place restrictions on the exchange of information with affiliated companies, making it difficult to provide services to customers. In its current form, the bill would, with some exceptions, require a financial institution to provide a consumer with an option to “opt-out” of the disclosure of his or her nonpublic, personal information to affiliated entities and to obtain a consumer’s written consent (“opt-in”) before sharing information with third parties. The bill would become effective on July 1, 2004.
In addition, the measure is unnecessary and cumbersome since insurance companies are already regulated by federal privacy laws and a state privacy statute, which has been in effect for more than 20 years, Sorich said.
“ACIC believes current state law and Department of Insurance regulations give insurance policyholders adequate protection from any unauthorized use of personal financial information by insurance companies,” Sorich said. “The imposition of additional requirements would only make it more difficult for insurers and other financial institutions to do business in the state.”
ACIC is urging Gov. Davis to veto SB 1.
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