ARIZONA STATE SENATE
Phoenix, Arizona
insurance department;
information sharing
Permits the Department of
Insurance (DOI) to exchange confidential information with various parties and enter
into agreements with other organizations and individuals as necessary to
preserve the confidentiality of the information.
In 1999, the U.S. Congress passed the Financial Modernization Act, also known as the Graham Leach Bliley Act (GLB). GLB allows banks to affiliate with securities and insurance enterprises through the creation of Financial Holding Companies (FHC) and attempts to address the inefficiency, lack of uniformity, reciprocity and coordination within the existing multistate insurance regulatory system. The states were given three years (until November 12, 2002) to establish a system of reciprocity or uniform regulatory laws governing insurance producers. If at least 29 states, commonwealths and territories do not act by November 2002, GLB establishes the National Association of Registered Agents and Brokers (NARAB). NARAB will have the authority to preempt existing state laws governing insurance producer licensing.
One effect of GLB is the rise of so-called “functional regulation,” which is the regulation of different activities performed by firms that before 1999 may have been prohibited from engaging in them. This functional regulation requires a higher degree of communication and coordination among regulators of traditional financial services. Prior to GLB, regulators of banks had infrequent communication with regulators of insurance companies. With full implementation of GLB, higher degree of coordination and communication among different government agencies will occur and enhance reciprocity and uniformity.
S.B. 1020 attempts to facilitate DOI’s sharing of information among regulators, law enforcement officials and the National Association of Insurance Commissioners (NAIC), while maintaining the confidentiality of the shared information. Examples of such information include the work documents leading up to market conduct investigations, or to the production and publication of financial analysis, or transaction records that are required by statute, and may contain proprietary information from a financial institution.
According to DOI, there is no fiscal impact associated with this bill.
Provisions
1. Allows DOI to share confidential analytical information with other regulators, law enforcement officials and the NAIC and permits the Department to designate that information as confidential.
2. Authorizes DOI to enter into agreements with other parties as necessary to preserve the confidentiality of shared information.
3. Provides that disclosures to DOI of information regarding the purchase and sale of insurance companies, transactions within a holding company system or obtained in the course of an investigation are confidential and privileged, and are not public record.
4. Maintains the ability of the Director to release confidential information after giving the affected insurer notice and an opportunity for a hearing.
5. Makes technical and conforming changes.
6. Provides for a general effective date.
Prepared by Senate Staff
January 9, 2001