ARIZONA STATE SENATE
Phoenix, Arizona
insurance information;
privacy protection
Requires the protection of private and
personal information of insured by insurance producers and insurers.
Background
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 multi-state insurance regulatory system. GLB imposes requirements on financial institutions, including insurance companies, regarding disclosure of a consumer’s personal financial information. Federal regulations are responsible for enacting privacy standards governing banks. States are responsible for enacting standards governing the transaction of insurance. States must pass laws that are at least as stringent as the GLB requirements or the federal laws will supercede the states’ laws. Unlike many states, Arizona already has laws governing the privacy of consumers’ financial and medical information collected in the context of an insurance transaction. S.B. 1288 authorizes the Department of Insurance (DOI) to enforce GLB to bring them into compliance and to adopt rules to carry out that enforcement.
According to DOI, there is no fiscal impact associated with this bill.
Provisions
1. Requires notification of information practices of the insurer:
a) No later than the delivery of the certificate or policy to the consumer or at the time of collection of the information if it is not from the person or from public records.
b) At least annually, in the case of continuing relationships with the policyholder.
c) At reinstatement requests, if the notice was not given in the immediately preceding 12 months.
2. Allows notification to be in electronic form if the policy holder agrees and if the notification contains specific information regarding the type of personal information collected, categories of persons to whom the producer releases personal information and other criteria.
3. Provides that notice requirements outlined in federal statutes satisfy Arizona requirements for notice to consumers.
4. Eliminates reporting requirements that occur infrequently enough that they do not constitute a general business practice
5. Inserts the National Association of Insurance Commissioners model for notification of information practices.
6. Expands information practices limitations from insurance producers to include financial institutions trading customer information among their affiliates.
7. Makes technical and conforming changes.
8. Prescribes new definitions and retains existing definition of persona information which includes financial and medical information
9. Provides for a general effective date.
Amendment
Adopted by Committee
Authorizes the Department to enforce the Graham Leach Bliley Act and to adopt rules to carry out that enforcement.
Amendments Adopted by the House of Representatives
1. Provides clarification that notice requirements outlined in federal statutes satisfy Arizona requirements for notice to consumers.
2. Eliminates reporting requirements that occur infrequently enough that they do not constitute a general business practice
3. Inserts the National Association of Insurance Commissioners model for notification of information practices.
4. Expands information practices limitations from insurance producers to include financial institutions trading customer information among their affiliates.
Senate Action House Action
BI 3/1/01 DPA 6-0-0-0 FII 4/4/01 DPA 9-0-1-0
3rd Read 3/14/01 29-0-1-0 3rd Read 4/12/01 57-0-3-0
Final Read 4/19/01 30-0-0-0
Signed by Governor 4/23/01
Chapter 220
Prepared by Senate Staff
April 30, 2001