• NEBRASKA PRIVACY KIT AVAILABLE – JUST DO IT!
• SUMMARY OF NEBRASKA PRIVACY LAW REQUIREMENTS (LEST WE FORGET)

On July 1, 2001 the privacy requirements of the Nebraska Privacy of Insurance Consumer Information Act become enforceable. The new Nebraska law was enacted to give the Nebraska Department of Insurance the authority to implement the Gramm-Leach-Bliley Act (GLBA), a Federal law enacted in 1999 that requires financial institutions to take measures to protect the privacy of consumers.

• The Nebraska law requires insurance agents, agencies, and brokers (as well as insurance companies) to develop a privacy policy for their customers:

• who obtain insurance for personal, family or household purposes, and
• who are beneficiaries of group plans and workers’ compensation plans/insurance.

• Customers which fall into the above categories must be notified of the policy once every 12 months.
• The policy must identify what nonpublic personal information is collected, what procedures the agency employs to protect the confidentiality of collected information, what information is disclosed, and to whom it is disclosed (including any disclosures to an affiliate under the Fair Credit Reporting Act).If an agency only discloses nonpublic personal information to an insurer, licensed excess lines broker, or other non-affiliate for the purpose of quoting or servicing an insurance policy, or to a third party for certain marketing activities, the agency does not need to provide customers or consumers the opportunity to opt out.However, if an agency plans to disclose information to parties for other purposes, customers and consumers must be given the opportunity to direct the agency to keep the information confidential (the opt-out notice). Consumers must also be given the agency’s privacy policy at the same time.Agent Exemption: Agents are exempted from both the privacy policy and opt-out notice requirements if the company(ies) they are appointed with comply with the act (including providing proper notification to customers), and agents do not disclose any nonpublic financial information to anyone but the company or the company’s affiliates.
• In Nebraska, the exemption applies even in situations when the agent solicits competitive bids—but surrounding states will probably not allow the exemption in bidding situations.Reversing a prior regulatory interpretation, there is no requirement to amend agency-company agreements to guarantee compliance by the company, but it’s a good idea.
• The exemption does not include an agent or agency that engages in insurance BROKER activities (including providing advice to customers or negotiating on their behalf).
• Beginning January 1, 2003, agents must obtain authorization (opt-in) from consumers and customers before disclosing nonpublic personal health information, except for the performance of certain insurance functions.
• Your agency must also implement mechanisms for protecting the security and integrity of the nonpublic personal information you collect.

SO WHAT DOES THIS MEAN YOUR AGENCY HAS TO DO – IN PLAIN ENGLISH?

Remind yourself that the new privacy law is intended to inform consumers who is getting their nonpublic personal information, and gives them the right to instruct financial institutions, including insurance and bank organizations, not to give their personal information to parties which don’t have anything to do with the product or service they are purchasing. As an independent insurance agent, you are in a unique position to advocate the interests of your customers with insurers, and with that comes the burden of making sure your customers are informed about how your agency uses their information.

Since the agent exemption does not apply to any brokerage-type situation when you are writing insurance with a company you are not appointed with, and the Nebraska Insurance Department’s interpretation of whether or not the exemption applies in competitive bid situations will probably not apply in other states, IIAN recommends that your agency develop its own privacy policy and notify customers and consumers as required by law. While you’re at it you might as well develop an opt-out notice for use when appropriate.

• According to the Nebraska Insurance Department, you can choose to provide notice only to customers and consumers for which you broker insurance or provide advice, and operate under the agent exemption for customers for which you provide insurance with a company you are appointed with – but as a practical matter it may be more costly to carve out that segment of your customer base. If you decide to operate under the agent exemption, make sure your companies provide proper notice and your agency does not share information with anyone but the companies with which you are appointed!
• Which of your customers to notify? Anyone who buys a personal lines policy, or a package policy which covers personal, family, or household risks (such as a farmowners policy) – both property/casualty and life/health. Also, in Nebraska, workers’ compensation and group plan policyholders (ie, employers) – except the Nebraska WC Plan for now (the Department is working on an "easy" compliance method for the "pool"). You don’t need to notify customers who buy strictly business or agricultural policies.
• How to provide notice? You can deliver notice in writing (by mail or in person), or electronically if your customers and consumers agree to it. Notices can be mailed with other communications.When to provide notice? Give initial notice to your existing customers by July 1, and annually thereafter. Give notice to new customers when they purchase a policy or a service, and give both notice and opt-out opportunity to consumers and customers if you’re going to share their information with a non-affiliated third party for anything other than insurance purposes, except defined marketing activities.

SAMPLE NOTICE

Why not use your initial privacy policy notice to your customers as an opportunity to remind them that you are their adviser and advocate? You could also enclose a customer survey or newsletter. Following is a sample notice you could put on your agency’s letterhead which meets all of the requirements of the law if you do not share any nonpublic personal information with anyone except an insurance company or licensed excess lines broker, or other non-affiliate for the purpose of obtaining insurance coverage.

NOTE: The summary above is only intended to make the new requirements easier to conceptualize – it should not be used as a complete guideline for complying with either federal or state law. For more specific, detailed guidance IIAN members should refer to IIAA’s "Insurance Agent And Broker’s Guide To Privacy" (available at www.independentagent.com), and to IIAN’s new Nebraska Privacy Kit for assistance in developing privacy policies and procedures required by Nebraska’s privacy law. Use the fax-back form below to order the Nebraska Kit.

SIGN UP TODAY: IIAN’s 2001 Free CE seminars will include a session on how to comply with the Nebraska privacy law – June 4 in Ogallala, June 5 in North Platte, June 6 at Mahoney State Park, June 7 in Grand Island, and June 8 in Norfolk. Space is going fast – call 1-800-377-3985 for information!

FAX-BACK REQUEST- Fax to (402)476-1586

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Sample Policyholder Privacy Disclosure Notice

(Print on agency letterhead)

To Our Valued Customers:

It is [Insert name of agency]’s policy to protect your privacy and the personal information you have entrusted to us. The Nebraska Privacy of Insurance Information act has now legislated consumer privacy protection into law: it requires any insurance agent, agency, company, or broker to notify you once each year how they will use your nonpublic personal financial information. To fulfill our duty to you as our customer, as well as the law, we are providing you with this document, which notifies you of our agency’s privacy policies and practices.

What kinds of nonpublic information do we collect about you?

In order to assist in obtaining appropriate insurance coverage and provide the best service for you, we may collect nonpublic personal financial information about you from the following sources:

• Information we receive from you on applications or other forms;

• Information about your transactions with us, our affiliates, or others; and
• Information we receive from a consumer reporting agency.

Unless it is specifically stated otherwise in an amended Privacy Policy Notice, no additional information will be collected about you.What is our policy on sharing your nonpublic information?

We do not disclose any nonpublic personal financial information about our customers or former customers to anyone, except as permitted by law. For our agency, this means:

1. We will only use your nonpublic financial information to assist in obtaining appropriate insurance coverage for you.
2. We will not disclose your nonpublic financial information to other parties for anything other than insurance underwriting purposes.
3. We do not buy, sell, lease or rent customer lists, or any information about you.

How do we protect your nonpublic information?

We restrict access to nonpublic personal information about you to those employees who need to know that information in order to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with Nebraska law to guard your nonpublic personal information.The trust you have placed in [Insert name of agency] is taken very seriously and every reasonable precaution is taken to maintain that trust now and in the future. Your business is very much appreciated!

Sincerely,

[Insert name of agency]