Alliance Reacts to Calif. Privacy ‘Truce’

A truce seems to have been reached in the long-running battle over privacy legislation in California, according to the Alliance of American Insurers.

“There is good news and bad news from Sacramento,” said Rey Becker, vice president of property/casualty for the Alliance, commenting on the recent passage of SB 1 by the Legislature. “The good news is that insurers will no longer need to worry about three vexing issues that had been looming on the horizon:

· “A costly initiative fight on the March 2004 statewide ballot, which will no longer be filed;

· Compliance with several onerous local privacy ordinances in the San Francisco Bay area that are now preempted; and

· Redundant involvement by the Attorney General’s Office in financial privacy enforcement, an area already handled by the Department of Insurance.

“Another positive is that, to the extent SB 1 intrudes upon disclosures between and among affiliates, it is probably preempted by the federal Fair Credit Reporting Act.

“However, the bad news is that, once Gov. Gray Davis signs SB 1, California will become only the fourth state to impose a costly and burdensome new insurance ‘opt-in’ system, joining New Mexico, North Dakota and Vermont. This will mean fewer choices and higher premiums for insurance consumers in these states.”