New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on December 19, 2001, representing the position of the New York State Insurance Department.

Re: Alleged Conflict Between N.Y. Ins. Law and Gramm-Leach-Bliley Act

Question Presented:

May an insurer refuse to disclose bodily injury liability insurance limits as required by N.Y. Ins. Law § 3420(f)(2)(A) (McKinney 2000) and N.Y. Ins. Law § 2601(a)(6) (McKinney 2000), citing the Gramm-Leach-Bliley Act, Pub. L. No. 106-102, 113 Stat. 1338 (1999), as the reason for its refusal to disclose?

Conclusion:

No. An insurer may not refuse to disclose bodily injury liability insurance limits as required by N.Y. Ins. Law § 3420(f)(2)(A) (McKinney 2000) and N.Y. Ins. Law § 2601(a)(6) (McKinney 2000), citing the Gramm-Leach-Bliley Act, Pub. L. No. 106-102, 113 Stat. 1338 (1999), as the reason for its refusal to disclose.

Facts:

No additional facts relating to this inquiry were given.

Analysis:

N.Y. Ins. Law § 3420(f)(2)(A) (McKinney 2000) states in relevant part:

Upon written request by any insured covered by supplemental uninsured/underinsured motorists insurance or his duly authorized representative and upon disclosure by the insured of the insured’s bodily injury and supplemental uninsured/underinsured motorists insurance coverage limits, the insurer of any other owner or operator of another motor vehicle against which a claim has been made for damages to the insured shall disclose, within forty-five days of the request, the bodily injury liability insurance limits of its coverage provided under the policy or all bodily injury liability bonds.

N.Y. Ins. Law § 2601(a)(6) (McKinney 2000) states that an unfair claim settlement practice by an insurer includes "failing to promptly disclose coverage pursuant to subparagraph (A) of paragraph two of subsection (f) of section three thousand four hundred twenty of this chapter."

Therefore, an insured who has supplemental uninsured/underinsured coverage (SUM) has the right to obtain the bodily injury coverage limits from the insurance company of the party against which he or she has a claim, upon disclosure of his/her own bodily injury and SUM coverage limits to the insurer, and the failure of the insurer to provide the limits within 45 days of the request constitutes an unfair claim practice in violation of the Insurance Law.

An insurer has refused to disclose its bodily injury liability insurance limits as required by N.Y. Ins. Law § 3420(f)(2)(A) and N.Y. Ins. Law § 2601(a)(6), citing the Gramm-Leach Bliley Act (GLBA) as prohibiting financial institutions from providing policyholder information, including policy limits, without the permission of its insured.

Chapter 94-Privacy, of the GLBA, 15 U.S.C.A. § 6801, et seq. (Supp. 2001), discusses disclosure of nonpublic personal financial information by financial institutions (an insurance company is considered a financial institution under the GBLA). Section 6801(a) states that: "It is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ nonpublic personal information." Section 6801, et seq. also requires that state insurance authorities establish appropriate consumer privacy standards for insurance providers. Section 6805(c), Absence of State action, states: "If a State insurance authority fails to adopt regulations to carry out this subchapter, such State shall not be eligible to override, pursuant to section 1831x(g)(2)(B)(iii) of Title 12, the insurance customer protection regulations prescribed by a Federal banking agency under section 1831x(a) of Title 12."

Sections 6802 and 6803 of the GLBA list specific protections that state regulators must implement. These include requirements that financial institutions maintain a privacy policy that is clearly communicated to consumers and customers, that no nonpublic personal financial information be disclosed to nonaffiliated third parties unless a consumer has been given a chance to "opt out" of having his or her information disclosed, and that no specific account information be given to direct marketing firms. The GLBA also provides numerous exceptions to specific consumer protections.

New York State implemented the specific protections by promulgating N.Y. Comp. Codes R. & Reg. tit. 11, Part 420 (2000) (Regulation 169). Regulation 169 governs the treatment of nonpublic personal information concerning individuals (defined as consumers or customers) in New York by all licensees of the Insurance Department.

N.Y. Comp. Codes R. & Regs. tit. 11, § 420.15(a) (2000) lists exceptions to the opt out requirement and states in part:

Exceptions to opt out requirements. The requirements for initial notice to consumers 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 in as described in section 420.13 of this Part, do not apply when a licensee discloses nonpublic personal financial information:

(1) With the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction . . . .

(2) (i) To comply with federal, state, or local laws, rules and other applicable legal requirements;

(ii) To comply with a properly authorized civil, criminal or regulatory investigation, or subpoena or summons by federal, state or local authorities; or

(iii) To respond to judicial process or government regulatory authorities having jurisdiction over a licensee for examination, compliance or other purposes as authorized by law; . . .

Therefore, the insurer’s assertion that the Gramm-Leach-Bliley Act prohibits its disclosure from "providing policyholder information which includes policy limit information unless permission of [its] insured is obtained or a court order is issued to provide such information," is erroneous. Firstly, in New York State, Regulation 169 governs this set of facts. Secondly, an exception exists in both Regulation 169 and the GLBA for complying with federal, state, or local laws, rules and other applicable legal requirements.

The insurer, by not supplying the requested information, is in violation of N.Y. Ins. Law § 3420(f)(2)(A) and, if such is an ongoing business practice, constitutes an unfair trade practice under N.Y. Ins. Law § 2601(a)(6).

For further information, you may contact Senior Attorney Meredith S. Kaufer at the New York City Office.