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PIA Sets Federal Legislative Priorities for 2003

The 108th Congress officially began January 7, 2003. Republicans and Democrats are setting their respective agendas for the next two years. Soon the session...
January 10, 2003

Issues of Focus Include Privacy, Optional Federal Charter, Ownership of Data, Natural Disaster

By Peter Bizzozero
Assistant Vice President, Federal Affairs
PIA National

The 108th Congress officially began January 7, 2003. Republicans and Democrats are setting their respective agendas for the next two years. Soon the session will be in full swing. That's why it is important now to identify our priorities for the 108th Congress, so that we may educate new and returning Members about our positions -- and persuade them to support our viewpoint.

Four issues of importance to agents that could be addressed during the 108th Congress include control of agent-owned data, privacy, insurance regulation and coverage for natural disasters.

FCRA and Agent Ownership of Data

The 108th Congress is expected to consider reauthorization of the Fair Credit Reporting Act (FCRA), as key provisions are set to expire. This will provide PIA with the opportunity to press our position regarding the ownership of customer data.

Under amendments to FCRA adopted in 1996, an exception permits financial conglomerates to share customer information among their affiliates for purposes of offering additional products and services. The exception allows businesses to share information with affiliated companies without becoming credit reporting agencies (CRAs), as long as they allow consumers to "opt out" prior to such information sharing.

PIA National opposed this exemption, especially as it relates to banks. In practice, banks interpreted this exemption to mean that any information they receive from a customer -- including insurance information not owned by the bank -- is theirs to share with their affiliates. Banks argue that once they receive information from any sourceit is owned by them and this exemption gives them the right to pass it on to their affiliates.

PIA strongly disagrees with this interpretation because it gives banks unfair advantages. We maintain that agents and/or insurers -- not banks -- own this information. The practical effect of the banks' interpretation of the FCRA amendments is to negate this ownership. In addition, unless agents or insurers are legal affiliates of a financial conglomerate, they are unable to perform similar sharing activities with the information. This is patently unfair. The fact that Congress will be debating FCRA reauthorization during this session gives PIA the opportunity to correct this inequity.


While everyone supports the concept of privacy, well-intentioned privacy legislation can sometimes cause unintended negative consequences for PIA members.

Case in point: While PIA has been, and continues to be, an avid supporter of privacy protection legislation, we objected strongly to the Section 5 Privacy provisions of the Gramm-Leach-Bliley Act (GLBA) being applied to insurance because they create redundant and legally conflicting obligations for the insurance sector.

In 1982, the National Association of Insurance Commissioners (NAIC), along with our industry, created a model insurance privacy law that 17 states adopted. The majority of carriers voluntarily adopted it as their internal information practice procedure. In addition, insurance entities are generally responsible under common law and other federal and state laws to maintain material levels of privacy, confidentiality and management of various disclosure practices.

New privacy requirements that are redundant and duplicative should not be enacted and existing requirements that fit the same description need to be repealed.

Senator Richard Shelby (R-AL), a staunch privacy advocate, is now Chairman of the Senate Banking, Housing and Urban Affairs Committee. Senator Shelby has noticed the entanglement of confusing and conflicting privacy regulations. Accordingly, we could see some corrective action.

Optional Federal Charter

Another issue important to agents is that of an optional federal charter. PIA National is opposed to federal optional charters for insurance entities and the dual/parallel state-federal regulatory system that they require.

While the current regulatory system labors under a lack of sufficient uniformity, the state system has been moving rapidly toward the goal of uniformity as required by the Gramm-Leach-Bliley Act (GLBA). Adding another competing system at the federal level, with optional federal chartering, would take us further away from our goal of more uniformity.

Although we do not believe that optional federal charters will be on the "front burner" this year in Congress, PIA National nevertheless stands ready to fight such proposals.

Natural Disaster Legislation

The 108th Congress may address natural disaster legislation. Last year, Rep. Mark Foley (R-FL) introduced the Policyholder Disaster Protection Act, H.R. 785, which would change current tax law to allow insurance companies to direct some premiums to a reserve fund. The fund, by law, would be protected exclusively for the payment of future claims associated with a large-scale natural disaster.

PIA National has long supported federal natural disaster legislation that accomplishes dual goals of opening markets in under-served communities as well as ensuring the solvency of insurance companies in the event of a catastrophic natural disaster. In general, PIA believes natural disaster legislation should include certain key principles. These include:

  • Increasing availability of homeowners insurance in all regions of the country;
  • Covering residential and commercial losses;
  • Not interfering with the rights of states to regulate the insurance industry;
  • Not competing with private sector capacity to provide insurance.

We are committed to working with all groups interested in developing and enacting meaningful natural disaster legislation that is politically viable and meets the needs of the insurance community and consumers. Only if consensus is reached within the insurance industry is there real hope to enact natural disaster legislation.

These are the main issues of concern to PIA members that we expect may see action in the 108th Congress. But as recent experience has shown us, the expected sometimes gets postponed because of unexpected events. The terrorist attacks of September 11, 2001 caused Congress to focus on new issues and PIA to embark on a successful, 14-month campaign to win passage of a terrorism insurance backstop. So while PIA National prepares to deal with the expected, as always, we remain prepared to deal with unexpected issues that have an impact on our members.

Of course, the best way to ensure that PIA has maximum impact on federal legislation is for you to attend the 2003 PIA Federal Legislative Summit on April 3 in Washington, D.C.

I look forward to seeing you all at the 2003 FLS!

Peter Bizzozero can be reached at and 703-518-1365.

This article originally appeared in the January 2003 PIA Connection.