May 14, 2002
Commissioner Terri Vaughan Dear Ms. Vaughan: I am writing in regard to a recent report to me prepared by the General Accounting Office (GAO) entitled "Financial Privacy: Status of State Actions on Gramm-Leach-Bliley Act’s Privacy Provisions" (GAO-02-361). In that report, the GAO says that while all of the states have acted to implement the consumer notice and disclosure requirements of the Gramm-Leach-Bliley Act’s (GLBA) privacy provisions, the states have not done nearly as well implementing GLBA protections for the security and confidentiality of insurance customer information. In fact, the report found that "Only one state, New York, has established standards for protecting the security and confidentiality of insurance customer information as of March 1, 2002. Another state, California, has issued proposed regulations establishing such standards." (page 3). Although the National Association of Insurance Commissioners (NAIC) has adopted a Model Safeguarding Regulation, 48 states must act, in some cases by legislation, before security and confidentiality protections that are consistent with GLBA are implemented at the state level. Assuming the states are willing to act, it could be years before insurance consumers get the security and confidentiality protections envisioned by GLBA. According to the report, "During the time it takes for the states to issue safeguarding standards, insurance customers in these states might have reduced assurances that they will have a level of legal protection over the security and confidentiality of their information consistent with that of the customers of banking and securities companies" (pages 15 and 16). Allegedly, the purpose of GLBA was to give consumers as well as financial institutions rights and protections they need. I am greatly concerned that, due to state inaction, insurance consumers are not now receiving, nor will they be receiving in the foreseeable future, protections they are due. Therefore, I want to know when you believe each of the remaining 49 states (including California) and the District of Columbia will adopt security and confidentiality requirements that bank and securities consumers now receive pursuant to GLBA. This information will be of particular value to me and the Congress in evaluating the strengths and weaknesses of the current system for regulating insurance. Please provide the information I have requested no later than Monday, June 10, 2002. Should you or your staff have any questions, please contact Mr. Bruce Gwinn, Committee on Energy and Commerce Democratic staff, at (202) 226-3400. Please fax the responses to Sharon Davis, Chief Minority Clerk, at (202) 225-2525 or hand deliver to Ms. Davis c/o the Committee on Energy and Commerce Democratic Staff, 2322 Rayburn House Office Building, Washington, D.C. 20515. Due to significant delays in postal deliveries on Capitol Hill, we ask that your response not be sent through the postal service. Thank you for your cooperation. Sincerely,
cc: The Honorable W. J. "Billy" Tauzin, Chairman The Honorable Michael G. Oxley, Chairman The Honorable John J. LaFalce, Ranking Member
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