Losing Sleep Over Privacy

In the last issue, I wrote about getting a grip on GLBA. As we creep closer to the July 1 deadline, I think the subject needs some more clarification.

Last week, a reader called me in a panic wondering if the requirements applied to her company. A compliance underwriter for a major broker in Orange, Calif., she had been coasting along on the advice of general counsel, which was basically: “You’re fine—that only applies to personal lines.” Then she read “GLBA in a Nutshell” (IJ, June 11), which states: “Among other things, the regulations require virtually all independent agents and brokers to notify their customers of the firm’s privacy policies by July 1, 2001.”

Virtually all? “We don’t write any medical or personal, just large commercial and E&O for groups like Allstate and Farmers agents—does this apply to us?” she wanted to know. “Because if so, we’ve got a week to hire some temps and get cracking.”

Time for some answers—I picked up the phone to call Steve Young, general counsel for IBA West.

A week earlier at the Young Agents and Brokers Conference in Rancho Mirage, Young had tackled the Gramm-Leach-Bliley specter for an appreciative audience. First, he asked for a show of hands of those who had received privacy notices in the mail—hands went up all over the room. Then he asked who had sent out their own privacy notices as required by GLBA—only one hand went up. “In all my years in the industry, I have never encountered a regulatory block of requirements that is more complicated than these,” Young told the group.

During these crucial weeks before the deadline, Young is eating and sleeping privacy as he crisscrosses the West Coast teaching a series of privacy workshops. He called me from a bus shuttling between workshops; unfortunately, his answer was not as simple as hoped. “You can’t say ‘This is for personal lines only, this doesn’t apply to commercial lines,'” he emphasized. “It is primarily intended for personal, but some commercial policies do have provisions that apply to personal lines.”

Another instance where GLB would apply is if a client has a BOP and wants to put a rider on it for personal auto, for example.

Young’s advice: “If in doubt, talk to your companies with questions as to whether it applies. Or, if it’s a gray area, make the disclosure to be safe.”

Here are the guidelines laid out by IBA West:

Q) Do these regulations apply solely in personal lines?

A) No. The GLBA privacy rules are intended to protect individuals who purchase products or services that are primarily used for personal, family or household use. The privacy rules do not apply to companies or individuals that obtain products or services for business, commercial or agricultural purposes, or to information gathered in connection with such coverages (D&O policies, for example). However, some commercial policies are sold to individuals where the coverage is “primarily” for their personal, family or household use, including but not limited to the following products: farm or ranch, personal excess, yacht, inland marine.

So, don’t panic. Odds are, if you are strictly a commercial lines agent or broker, you’re safe. But it’s definitely worth checking into.

Topics Agencies Legislation