Last month, the Privacy Protections (H) Working Group (the Working Group) of the National Association of Insurance Commissioners (NAIC) issued a request for information concerning the Working Group’s path forward regarding its ongoing work to modernize the state regulation of consumer insurance data. The Working Group sought input on whether it should continue work on its draft Privacy Model #674 or revise one or both of its existing models (either Model Law [ML] #670 or ML #672), taking into consideration an industry-developed markup of ML #672.

In early 2023, the Working Group began consideration of a potential Model #674, and, though the Working Group produced several iterations last year, PIA expressed its opposition to each iteration.

In our most recent comments, PIA strongly discouraged the Working Group from continuing its work on its draft Privacy Model #674. We have had substantial concerns about the effect that #674 would have on the constantly evolving ways independent agents use data to strengthen the independent agency model and facilitate the growth of their small and mid-sized businesses all around the country. Those concerns have only grown in the time since the Working Group last engaged interested parties on this issue, as agents have continued to integrate new technologies into their businesses.

The most recent iteration of Model #674 was exposed for comment in the summer of 2023; it was overly broad and sought to regulate tangentially related issues, like disclosures around adverse underwriting decisions and oversight of third-party service providers. We also had concerns about the proposed limitations on the way licensees could use consumer information, which would have been at odds with some independent agents’ legal obligations. In some circumstances, such uses are required because of state-imposed fiduciary requirements or federally funded insurance programs like the NFIP.

PIA supports the Working Group’s efforts to modernize the NAIC’s current regulatory regime by revising one or more of its existing models. This approach would allow the Working Group to capitalize on, rather than recreate, its prior work and maintain regulatory continuity. It would also reinforce the NAIC’s position as the standard-setting body for the states and demonstrate that the NAIC is the premier regulator of insurance entities, and, in that capacity, is actively modernizing its consumer data regulatory regime.

In addition to submitting our own comments, we also joined an industry coalition letter that expressed similar concerns. We look forward to working with members of the coalition and regulator members of the Working Group to find common ground and identify consumer protections that will modernize the existing NAIC regime without entirely subsuming it.