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Department Leading the Nation, Puts Financial and Health Information Safeguards in Place

Superintendent Neil D. Levin today announced that the New York State Insurance Department has issued a privacy regulation affording New York State insurance consumers the strongest privacy protections ever provided to New York’s insurance consumers with respect to their nonpublic personal financial and health information.

"The regulation ensures that appropriate protections are in place as New York leads the way in implementing the law and in shaping insurance regulation in this new era of financial modernization. Consumers must be made aware of their rights so that they can make informed decisions regarding the use of their personal information," said Levin. "Under the new regulation, all of New York’s insurance consumers will be given the opportunity to prevent unwanted disclosure of their nonpublic personal information."

The regulation will require a licensee of the Department to provide an initial notice about its privacy policies and practices to individuals describing the conditions under which nonpublic personal financial information and nonpublic personal health information is to be shared with nonaffiliated parties before any such information may be disclosed. The regulation also provides that all insurers must give customers an annual notice of the opportunity to "opt-out" and block the sharing of nonpublic personal financial information with third parties.

Consumers’ and customers’ health information will be given even greater protection. Outside of carefully drawn business exceptions, licensees will not be allowed to share any health information. Without express permission, insurers are barred from sharing nonpublic personal health information with affiliates or third parties. A consumer or customer may grant a licensee permission to share the information with affiliates or third parties only by "opting-in". An "opt-in" authorization must specify the length of time for which the authorization will remain valid and cannot exceed 24 months.

The regulation further protects consumers by preventing discrimination against customers or consumers on the basis of the exercising of his or her right to opt-out or failure to opt-in. Licensees who violate the regulation are deemed to have engaged in an unfair trade practice. The effective date for compliance is July 1, 2001 for financial information and December 31, 2001 for health information.

"This regulation is another example of the Department’s leadership in protecting New York’s consumers," said Levin. "The Department is committed to assuring New York consumers that they will be able to protect their privacy."

The Gramm-Leach-Bliley Act (GLBA), passed by Congress last fall, allows banks to combine with other kinds of businesses, including insurance companies. Title V of the GLBA requires financial institutions, including insurers, to protect the privacy of consumers and customers and requires that state insurance authorities establish appropriate consumer privacy standards for insurance licensees. Congress enacted certain federal privacy standards and required state insurance regulators to adopt privacy rules at least as stringent as the federal law. Federal financial services regulators have adopted privacy regulations for other financial services institutions.

In February of this year, the Department requested by circular letter that all licensees provide the Department with information regarding current practices relating to privacy. In June, the Department drafted a privacy proposal, making it available on the web-site and soliciting comments from the industry, consumer groups, and the public via a circular letter and press release. A second draft of the regulation was released in August and a public hearing was held in September. The regulation is consistent with both the model regulation proposed by the National Association of Insurance Commissioners (NAIC) and the regulations promulgated by the federal financial services regulators. Copies of Regulation 169 are available on the Department’s website at

Department of Financial Services


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