PRIVACY

DATA SECURITY BREACH

THE ISSUE IS… Identity theft is the fastest growing crime in the country and with the highly publicized security breaches from ChoicePoint, LexisNexis, Bank of America, Citibank, and CardSystems Solutions, Inc., regulators have opened investigations into the data security failures. The latest data security failure occurred at TJX Cos., parent of retailers Marshalls and T.J. Maxx, when a hacker accessed and compromised credit and debit transactions for customers in the U.S. and Puerto Rico and may involve customer accounts from the United Kingdom and Ireland It is estimated that 40 million credit and debit card may be affected.

IT’S IMPORTANT BECAUSE… The Federal Trade Commission estimates that 10 million Americans fall victim to identity theft year, therefore costing consumers and businesses more than $55 billion annually.

Financial information privacy remains a controversial and politically significant issue. The continued attention on privacy is leading to increasing awareness of the vulnerabilities of companies and their affiliates.

Congress has been studying the issue and last Congress introduced various pieces of legislation to address this dilemma. Among the key issues to were addressed were: 1) what breaches should trigger notifying customers, i.e. any unauthorized disclosure or disclosures that could lead to malfeasance such as identity theft; 2) should there be state functional regulation or if not, which federal agency should have jurisdiction to enforce notifications; and 3) will federal legislation preempt state laws?

At the state level, 39 states considered data security legislation and 19 states enacted new laws last year. Therefore, increasing the pressure for a national standard.

NAMIC POSITION… The highly publicized security breaches have led the Congress to consider ways to reduce the frequency of such breaches and to ameliorate the adverse impact on those persons whose personal information has been compromised. NAMIC supports legislation that would establish a national standard for notifying consumers when a security breach has occurred and it is likely that the information will be misused. It is also important to ensure that any legislation does not create a burdensome process on either the financial institutions or consumers.

NAMIC also supports the privacy provisions contained in the Gramm-Leach-Bliley Act (GLBA) as well as the Fair Credit Reporting Act (FCRA). NAMIC believes that consumers deserve to know that the "nonpublic personal information" they submit to a financial institution, including an insurance company, will not be used in an inappropriate manner or obtained by any unauthorized person(s). However, NAMIC recognizes that, despite the best intentions and provisions contained in GLBA and FCRA, identity theft has become the fastest growing crime in the United States.

Posted: Friday, March 30, 2007 12:00:00 AM. Modified: Friday, March 30, 2007 2:41:18 PM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.