The Office of General Counsel issued the following informal opinion on June 5, 2001, representing the position of the New York State Insurance Department.
Re: Regulation 169 and Sharing of Third Party Claimants Information Between the Insurer and its Agent
1. May an insurer permit its agent to have access to the insurers records regarding the agents client, which records contain nonpublic personal financial information regarding a third-party claimant, even though the insurer has not provided a privacy notice to the third-party claimant?
2. Must an insurer provide a toll-free phone number to a consumer for the purpose of allowing the consumer to exercise the consumers opt-out right?
1. Yes, an insurer may permit its agent to have access to the insurers records regarding the agents client, which records contain nonpublic personal financial information regarding a third-party claimant, even though the insurer has not provided a privacy notice to the third-party claimant.
2. No, an insurer is not required to provide a toll-free number to a consumer for the purpose of allowing the consumer to exercise the consumers opt out rights, but must provide a reasonable means to opt out, which may include a toll-free phone number.
The inquirer represents an insurer. Insurance agents, all of whom are independent insurance agents, have access to the inquirers claims system. Information included in the claims system includes the names, addresses, ages, and other personal information regarding third party claimants who have made claims on policies issued to insureds. This information may be nonpublic personal financial information. On occasion, the agent may have provided the nonpublic personal financial information when the insured contacted the agent about a claim, but in other cases the agent may not have had any prior information regarding the claimant. The inquirer states that the agent may be interested in the claims filed against the policy of the insured so as to better service the insured, who is the agents client. In addition, in some circumstances, the agent has the authority to process the claim. (We assume that the inquirer means that the agent will adjust the claim, which, in certain circumstances, an agent has authority to do.) The inquirer states that, at times, the only information that it has initially is the name of a person, so that the inquirer would not even be able to provide the notice.
Preliminarily, we note that the agents status as an independent agent is not necessarily controlling. An independent insurance agent is merely an agent that is not owned or controlled by any insurer and whose agency agreement does not prohibit the representation of other insurers, and which agreement provides that the agents records and use and control of expirations remain the property of the agent. N.Y. Ins. Law § 2101(b) (McKinney 2000). However, an insurance agent may not be an independent insurance agent and may also not be an affiliate of the insurer, and hence the insurer would not be able to take advantage of the affiliate exception contained in the regulation.
A third party claimant under an insurers policy is a consumer within the meaning of N.Y. Comp. Codes R. & Reg. tit. 11, § 420.3(e)(2)(iv)(a)(II) (2001) (Regulation 169), but is not a customer under N.Y. Comp. Codes R. & Reg. tit. 11, § 420.3(h). Accordingly, under Regulation 169, the insurer is not required to provide a consumer with the privacy notices required by the regulation:
before a licensee discloses any nonpublic personal financial information about the consumer to any nonaffiliated third party, if a licensee makes such a disclosure other than as authorized by sections 420.14 and 420.15 of this Part. N.Y. Comp. Codes R. & Reg. tit. 11, § 420.4(a)(2) (2001).
Where the agent is an affiliate of the insurer, than the above section would not require notice if the insurer discloses information to the agent. Where the agent is not an affiliate of the insurer, it is the opinion of this office that the sharing of information under the circumstances described would come within the exception contained in N.Y. Comp. Codes R. & Reg. tit. 11, § 420.14 (2001), which provides, in pertinent part:
The requirements for initial notice to the consumer in section 420.4(a)(2) of this Part, and the opt out provisions in sections 420.7 and 420.10 of this Part and their application to service providers and joint marketing as described in section 420.13 of this Part, do not apply if the licensee discloses nonpublic personal financial information as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes, or in connection with:
(1) Servicing or processing an insurance product or service that a consumer requests or authorizes;
(2) Maintaining or servicing the consumer's account with the license.
Accordingly, under the circumstances described, it is our opinion that the inquirers company would not be required to provide the privacy notices to the third-party claimants. The agent, it should be noted, may not share the information with any other person without providing the appropriate notices, except as permitted under N.Y. Comp. Codes R. & Reg. tit. 11, § 420.11 (2001).
The inquirer also questioned whether an insurer must provide a toll-free phone number to a consumer for the purpose of allowing the consumer to exercise the consumers opt out right.
N.Y. Comp. Codes R. & Reg. tit. 11, § 420.7(a)(2) (2001) provides, in pertinent part:
(ii) Reasonable opt out means. A licensee provides a reasonable means to exercise an opt out right if it:
(a) Designates check-off boxes in a prominent position on the relevant forms with the opt out notice;
(b) Includes a reply form together with the opt out notice;
(c) Provides an electronic means to opt out, such as a form that can be sent via electronic mail or a process at the licensee's web site, if the consumer agrees to the electronic delivery of information; or
(d) Provides a toll-free telephone number that consumers can call to opt out. . . .
(iv) Specific opt out means. A licensee may require each consumer to opt out through a specific means, as long as the means is reasonable for that consumer.
Under the regulation, a toll-free telephone number is only one possible means of a reasonable opt-out, and is not mandated in every case.
For further information, you may contact Supervising Attorney Paul A. Zuckerman at the New York City office.