806 KAR 3:210 - Privacy of consumer financial and health information
RELATES TO: KRS 304.2-105, 15 U.S.C. 6801-6809, the Gramm-Leach-Bliley Act
NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110 provides that the commissioner of the Department of Insurance may make reasonable rules and administrative regulations necessary for or as an aid to the effectuation of any provisions of the Kentucky Insurance Code. The Gramm-Leach-Bliley Act, 15 U.S.C. 6801(b) and 6805, requires state insurance commissioners to establish standards for insurers, agencies, and agents to safeguard the security and confidentiality of consumer records and information. 15 U.S.C. 6801 to 6809 applies to financial institutions engaging in financial activities such as "Insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability, or death, or providing and issuing annuities, and acting as principal, agent, or broker for the purpose of the foregoing, in any State." This administrative regulation extends the application to protect individuals "who obtain or are claimants or beneficiaries of products or services primarily for personal, family, or household purposes from licensees," in harmony with the federal regulations. This stricter standard will hold all Kentucky licensees to the same standard, protect the privacy of Kentucky citizens, and promote uniformity of state insurance administrative regulations across state borders because this administrative regulation is based on a national model adopted by the National Association of Insurance Commissioners. Although federal law does not prohibit financial institutions from discriminating against individuals who have used their right to opt out or refused to grant authorization to disclose nonpublic personal financial information, this administrative regulation protects Kentucky citizens from discrimination. This administrative regulation establishes security requirements for an insurer's, agency's, or agent's use of consumers' financial and health information.
Section 1. Definitions.
(1) "Affiliate" means a company that
controls, is controlled by, or is under common control with another
company.
(2) "Annually" means at
least once in a period of twelve (12) consecutive months during which a
customer relationship exists.
(3)
"Clear and conspicuous" means that a notice is reasonably understandable and
designed to call attention to the nature and significance of information in the
notice.
(4) "Collect" means to
obtain information that the licensee organizes or can retrieve by the name of
an individual or by identifying number, symbol, or other identifying particular
assigned to the individual, irrespective of the source of the underlying
information.
(5) "Commissioner"
means the Commissioner of the Kentucky Department of Insurance.
(6) "Company" means a corporation, limited
liability company, business trust, general or limited partnership, association,
sole proprietorship, or similar organization.
(7) "Consumer":
(a)
1.
Means an individual who seeks to obtain, obtains, or has obtained an insurance
product or service from a licensee that is to be used primarily for personal,
family, or household purposes, and about whom the licensee has nonpublic
personal information; or
2. Means
that individual's legal representative.
(b) Does include:
1. An individual who provides nonpublic
personal information to a licensee in connection with obtaining or seeking to
obtain financial, investment, or economic advisory services relating to an
insurance product or service, regardless of whether the licensee establishes an
ongoing advisory relationship;
2.
An applicant for insurance prior to the inception of insurance coverage;
and
3. An individual subject to
disclosure by a licensee of nonpublic personal financial information to a
nonaffiliated third party, other than as permitted under Sections 14, 15, and
16 of this administrative regulation, if:
a.
The individual is a beneficiary of a life insurance policy underwritten by the
licensee;
b. The individual is a
claimant under an insurance policy issued by the licensee;
c. The individual is an insured or annuitant
under an insurance policy or an annuity issued by the licensee; or
d. The individual is a mortgagor of a
mortgage covered under a mortgage insurance policy.
(c) Does not mean an individual is
a "consumer" solely on the basis that:
1. An
individual is a consumer of another financial institution and the licensee is
acting as agent for, or provides processing or other services to, that
financial institution;
2. An
individual is a beneficiary of a trust for which the licensee is a trustee;
or
3. An individual has designated
the licensee as trustee for a trust.
(d) Does not mean an individual is a
"consumer" solely based on the status listed in subparagraph 2a through c of
this paragraph, if:
1. The licensee provides
the initial, annual, and revised notices under Sections 5, 6, and 9 of this
administrative regulation to the plan sponsor, group, or blanket insurance
policyholder, group annuity contract holder, or workers' compensation plan
participant; and
2. The licensee
does not disclose to a nonaffiliated third party nonpublic personal financial
information, other than as permitted under Sections 14, 15, and 16 of this
administrative regulation, about an individual who is:
a. A participant or a beneficiary of an
employee benefit plan that the licensee administers or sponsors or for which
the licensee acts as a trustee, insurer, or fiduciary;
b. Covered under a group or blanket life
insurance policy or group annuity contract issued by the licensee; or
c. A beneficiary in a workers' compensation
plan.
(e)
Does mean the individuals described in paragraph (d)2a through c of this
subsection are consumers of a licensee if the licensee fails to meet all the
conditions of paragraph (d)1 and 2 of this subsection.
(8) "Consumer reporting agency" is defined in
15 U.S.C.
1681a(f) of the federal Fair
Credit Reporting Act.
(9)
"Continuing relationship":
(a) Means a
relationship between a consumer and a licensee if:
1. The consumer is a current policyholder of
an insurance product issued by or through the licensee; or
2. The consumer obtains financial,
investment, or economic advisory services relating to an insurance product or
service from the licensee for a fee.
(b) Does not mean that a consumer has a
continuing relationship with the licensee if:
1. The consumer applies for insurance but
does not purchase the insurance;
2.
The licensee sells the consumer airline travel insurance in an isolated
transaction;
3. The individual is
no longer a current policyholder of an insurance product or no longer obtains
insurance services with or through the licensee;
4. The consumer is a beneficiary or claimant
under a policy and has submitted a claim under that policy choosing a
settlement option involving an ongoing relationship with the
licensee;
5. The consumer is a
beneficiary or claimant under a policy and has submitted a claim under that
policy choosing a lump sum settlement option;
6. The customer's policy has lapsed, expired,
or is otherwise inactive or dormant under the licensee's business practices,
and the licensee has not communicated with the customer about the relationship
for a period of twelve (12) consecutive months, other than annual privacy
notices, material required by law or administrative regulation, communication
at the direction of a state or federal authority, or promotional
materials;
7. The individual is an
insured or an annuitant under an insurance policy or annuity, respectively, but
is not the policyholder or owner of the insurance policy or annuity;
or
8. The individual's last known
address according to the licensee's records is invalid. An address of record is
invalid if mail sent to that address by the licensee is returned by the postal
authorities as undeliverable and if subsequent attempts by the licensee to
obtain a current valid address for the individual are unsuccessful.
(10) "Control" means:
(a) Ownership, control, or power to vote
twenty-five (25) percent or more of the outstanding shares of any class of
voting security of the company, or acting through one (1) or more other
persons;
(b) Control over the
election of a majority of directors, trustees, or general partners, or
individuals exercising similar functions of the company; or
(c) The power to exercise a controlling
influence over the management or policies of the company.
(11) "Customer" means a consumer who has a
customer relationship with a licensee.
(12) "Customer relationship" means a
continuing relationship between a consumer and a licensee under which the
licensee provides one (1) or more insurance products or services to the
consumer that are to be used primarily for personal, family, or household
purposes.
(13)
(a) "Designed to call attention" means that
the notice:
1. Uses a plain-language
heading;
2. Uses a typeface and
type size that are easy to read;
3.
Provides wide margins and ample line spacing;
4. Uses boldface or italics for key words;
and
5. Is in a form that combines
the licensee's notice with other information and uses distinctive type size,
style, and graphic devices, such as shading or sidebars.
(b) If a licensee provides a notice on an
Internet Web page, "designed to call attention" means that the notice uses text
or visual cues to encourage scrolling down the page to view the entire notice,
if necessary, and ensures that other elements on the Web site do not distract
attention from the notice, and the licensee either:
1. Places the notice on a screen that
consumers frequently access, including a page on which transactions are
conducted; or
2. Places a link on a
screen that consumers frequently access, including a page on which transactions
are conducted, that connects directly to the notice and is labeled
appropriately to convey the importance, nature, and relevance of the
notice.
(14)
"Financial institution":
(a) Means any
institution engaging in activities that are financial in nature or incidental
to financial activities as described in Section 4(k) of the Bank Holding
Company Act of 1956 at 12
U.S.C. 1843(k).
(b) Does not mean:
1. Any person or entity with respect to any
financial activity that is subject to the jurisdiction of the Commodity Futures
Trading Commission under 7
U.S.C. 1 to
27f of the Commodity Exchange
Act;
2. The federal Agricultural
Mortgage Corporation or any entity charged and operating under
12 U.S.C.
2001-2279cc of the Farm Credit Act of 1971;
or
3. Institutions chartered by
U.S. Congress specifically to engage in securitizations, secondary market
sales, including sales of servicing rights, or similar transactions related to
a transaction of a consumer, as long as the institutions do not sell or
transfer nonpublic personal information to a nonaffiliated third
party.
(15)
"Financial product or service" means:
(a) Any
product or service that a financial holding company could offer by engaging in
an activity that is financial in nature or incidental to a financial activity
described in Section 4(k) of the Bank Holding Company Act of 1956 at
12 U.S.C.
1843(k); and
(b) A financial institution's evaluation or
brokerage of information that the financial institution collects in connection
with a request or an application from a consumer for a financial product or
service.
(16) "Former
customer" means an individual with whom a licensee no longer has a continuing
relationship.
(17) "Health care"
means preventive, diagnostic, therapeutic, rehabilitative, maintenance, or
palliative care, services, procedures, tests, or counseling that:
(a) Relates to the physical, mental, or
behavioral condition of an individual;
(b) Affects the structure or function of the
human body or any part of the human body, including the banking of blood,
sperm, organs, or any other tissue; or
(c) Prescribing, dispensing, or furnishing to
an individual drugs or biologicals, or medical devices or health care equipment
and supplies.
(18)
"Health care provider" is defined by
KRS
304.17A-005(23).
(19) "Health information" means any
information or data except age or gender, whether oral or recorded in any form
or medium, created by, or derived from a health care provider or the consumer
that relates to:
(a) The past, present, or
future physical, mental, or behavioral health or condition of an
individual;
(b) The provision of
health care to an individual; or
(c) Payment for the provision of health care
to an individual.
(20)
"Insurance product or service" means:
(a) Any
product or service that is offered by a licensee, pursuant to KRS Chapter 304:
and
(b) A licensee's evaluation,
brokerage, or distribution of information that the licensee collects in
connection with a request or an application from a consumer for an insurance
product or service.
(21)
"Joint agreement" means a written contract pursuant to which a licensee and one
(1) or more financial institutions jointly offer, endorse, or sponsor a
financial product or service.
(22)
"Licensee":
(a) Means all insurers holding a
certificate of authority, licensed producers, companies, or business entities
licensed or required to be licensed, or authorized or required to be
authorized, or registered or required to be registered pursuant to the Kentucky
Insurance Code, KRS Chapter 304.
(b) Does not mean registered service contract
makers as defined in
806 KAR 5:060.
(23) "Necessary to effect,
administer, or enforce a transaction" means that the disclosure is:
(a) Required;
(b) Is one (1) of the lawful or appropriate
methods, to enforce the licensee's rights or the rights of other persons
engaged in carrying out the financial transaction or providing the product or
service; or
(c) Is a usual,
appropriate, or acceptable method:
1. To carry
out the transaction, the product, or the service business of which the
transaction is a part, and record, service, or maintain the consumer's account
in the ordinary course of providing the insurance product or service;
2. To administer or service benefits or
claims relating to the transaction, product, or service business of which it is
a part;
3. To provide a
confirmation, statement, or other record of the transaction, or information on
the status or value of the insurance product or service to the consumer or the
consumer's agent or broker;
4. To
accrue or recognize incentives or bonuses associated with the transaction that
are provided by a licensee or any other party;
5. To underwrite insurance at the consumer's
request or for any of the following purposes as they relate to a consumer's
insurance:
a. Account
administration;
b.
Reporting;
c. Investigating or
preventing fraud or material misrepresentation;
d. Processing premium payments;
e. Processing insurance claims;
f. Administering insurance benefits, such as
utilization review activities;
g.
Participating in research projects; or
h. As otherwise required or specifically
permitted by federal or state law; or
6. In connection with:
a. The authorization, settlement, billing,
processing, clearing, transferring, reconciling, or collection of amounts
charged, debited, or otherwise paid using a debit, credit, or other payment
card, check or account number, or by other payment means;
b. The transfer of receivables, accounts, or
interests; or
c. The audit of
debit, credit, or other payment information.
(24) "Nonaffiliated third party":
(a) Means any person who is not:
1. A licensee's affiliate; or
2. Employed jointly by a licensee and a
company that is not the licensee's affiliate.
(b) Includes:
1. Any company that is an affiliate solely by
virtue of the direct or indirect ownership or control of the company by the
licensee or its affiliate in conducting merchant banking or investment banking
activities of the type described in
12 U.S.C.
1843(k)(4)(H) and (I) of the
federal Bank Holding Company Act; and
2. A company that is not the licensee's
affiliate that jointly employs a person who is also employed by the
licensee.
(25) "Nonpublic personal financial
information":
(a) Means:
1. Personally-identifiable financial
information; and
2. Any list,
description, or other grouping of consumers, and publicly-available information
pertaining to them that is derived using personally-identifying financial
information that is not publicly available.
(b) Includes any list of individuals' names
and street addresses that is derived in whole or in part using
personally-identifiable financial information that is not publicly available,
such as account numbers.
(c) Does
not mean:
1. Health information subject to
Section 18 of this administrative regulation;
2. Publicly-available information, except as
included on a list described in paragraph (a)2 or (b) of this subsection;
or
3. Any list, description, or
other grouping of consumers and publicly-available information pertaining to
them that is derived without using any personally-identifiable financial
information that is not:
a. Publicly
available, including any list of individuals' names and addresses that contains
only publicly-available information;
b. Derived in whole or in part using
personally-identifiable financial information that is not publicly available;
and
c. Disclosed in a manner that
indicates that any of the individuals on the list is a consumer of a financial
institution.
(26) "Nonpublic personal health information"
means health information:
(a) That identifies
an individual who is the subject of the information; or
(b) With a reasonable basis to believe that
the information may be used to identify an individual.
(27) "Opt out" means a direction by the
consumer that the licensee not disclose nonpublic personal financial
information about that consumer to a nonaffiliated third party, other than as
permitted by Sections 14, 15, and 16 of this administrative
regulation.
(28)
"Personally-identifiable financial information":
(a) Means information:
1. That a consumer provides to a licensee to
obtain an insurance product or service from the licensee;
2. About a consumer resulting from a
transaction involving an insurance product or service between a licensee and a
consumer; or
3. That the licensee
otherwise obtains about a consumer in connection with providing an insurance
product or service to a consumer.
(b) Includes:
1. Information a consumer provides to a
licensee on an application to obtain an insurance product or service;
2. Account balance information and payment
history;
3. That an individual is
or has been one (1) of the licensee's customers or has obtained an insurance
product or service from the licensee;
4. Any information about the licensee's
consumer if it is disclosed in a manner that indicates that the individual is
or has been the licensee's consumer;
5. Any information that a consumer provides
to a licensee or that the licensee or its agent otherwise obtains in connection
with collecting on a loan or servicing a loan;
6. Any information the licensee collects
through an Internet cookie, an information-collecting device from a Web server;
and
7. Information from a consumer
report.
(c) Does not
mean:
1. Health information subject to Section
18 of this administrative regulation;
2. A list of names and addresses of customers
of an entity that is not a financial institution; and
3. Information that does not identify a
consumer, such as aggregate information or blind data that does not contain
personal identifiers such as account numbers, names, or addresses.
(29)
"Publicly-available information" means any information that a licensee has a
reasonable basis to believe is lawfully made available to the general public
from:
(a) Federal, state, or local government
records;
(b) Widely-distributed
media; or
(c) Disclosures to the
general public that are required to be made by federal, state, or local
law.
(30) "Reasonable
basis" to believe that information is lawfully made available to the general
public means the licensee has taken steps to determine:
(a) That the information is the type that is
available to the general public; and
(b) Whether an individual may direct that the
information not be made available to the general public and, if so, that the
licensee's consumer has not done so.
(31) "Reasonably understandable" means a
notice:
(a) Presents the information in the
notice in clear, concise sentences, paragraphs, and sections;
(b) Uses short explanatory sentences or
bullet lists, if possible;
(c) Uses
definite, concrete, everyday words and active voice, if possible;
(d) Avoids multiple negatives;
(e) Avoids legal and highly technical
business terminology, if possible; and
(f) Avoids explanations that are imprecise
and readily subject to different interpretations.
Section 2. Purpose and Scope. This
administrative regulation governs the treatment of nonpublic personal health
information and nonpublic personal financial information about individuals by
all licensees.
(1) This administrative
regulation:
(a) Requires a licensee to provide
notice to individuals about its privacy policies and practices;
(b) Describes the conditions under which a
licensee may disclose nonpublic personal financial information and nonpublic
personal health information about individuals to affiliates and nonaffiliated
third parties; and
(c) Provides
methods for individuals to prevent a licensee from disclosing that
information.
(2) This
administrative regulation applies to:
(a)
Nonpublic personal financial information about individuals who obtain or are
claimants or beneficiaries of products or services primarily for personal,
family, or household purposes from licensees; and
(b) All nonpublic personal health
information.
(3) This
administrative regulation shall not apply to information about companies or
about individuals who obtain products or services for business, commercial or
agricultural purposes.
Section
3. Compliance. A licensee domiciled in this state that is in
compliance with this administrative regulation in a state that has not enacted
laws or regulations that meet the requirements of Title V of the
Gramm-Leach-Bliley Act (Pub.L. 102-106 ) may be found to
be in compliance with Title V of the Gramm-Leach-Bliley Act in the other
state.
Section 4. Rules of
Construction.
(1) The Sample Clauses and
Examples, and the Model Privacy Forms and General Instructions in the material
incorporated by reference are not exclusive. Compliance with an example, use of
a sample clause, or model privacy form, to the extent applicable, shall
constitute compliance with this administrative regulation.
(2) Licensees may rely on use of the model
privacy form, consistent with the instructions, as a safe harbor compliance
with the privacy notice content requirements of this administrative
regulation.
(3) The Sample Clauses
and Examples contains sample clauses and examples for the following:
(a) Establishment of a customer relationship,
referenced in Section 5 of this administrative regulation;
(b) Exceptions to the required Initial
Privacy Notices to Consumers, referenced in Section 5 of this administrative
regulation;
(c) The annual privacy
notice to customers, referenced in Section 6 of this administrative
regulation;
(d) Customer
terminations, referenced in Section 6 of this administrative
regulation;
(e) Obtaining privacy
notices, referenced in Section 7 of this administrative regulation;
(f) Samples clauses of the notice content
required by Section 7 of this administrative regulation; and
(g) Joint consumer opt outs, referenced in
Section 8 of this administrative regulation.
(4) Use of the Model Privacy Forms and
General Instructions is not required. Licensees may continue to use other types
of privacy notices, including notices that contain examples and sample clauses
from the Sample Clauses and Examples if the notices accurately describe the
licensee's privacy practices and otherwise meet the notice content requirements
of this administrative regulation. However, while licensees may continue to use
privacy notices that contain examples or sample clauses, licensees may not rely
on use of privacy notices with the sample clauses from the Sample Clauses and
Examples as a safe harbor of compliance with the notice content requirements of
this administrative regulation after July 1, 2019.
Section 5. Initial Privacy Notice to
Consumers Required.
(1) Initial notice
requirement. A licensee shall provide a clear and conspicuous notice that
accurately reflects its privacy policies and practices to a:
(a) Customer. An individual who becomes the
licensee's customer, not later than when the licensee establishes a customer
relationship, except as provided in subsection (5) of this section;
and
(b) Consumer. A consumer,
before the licensee discloses any nonpublic personal financial information
about the consumer to any nonaffiliated third party, if the licensee makes a
disclosure other than as authorized by Sections 15 and 16 of this
administrative regulation.
(2) When initial notice to a consumer is not
required. A licensee shall not be required to provide an initial notice to a
consumer under subsection (1)(b) of this section if:
(a)
1. The
licensee does not disclose any nonpublic personal financial information about
the consumer to any nonaffiliated third party, other than as authorized by
Sections 15 and 16 of this administrative regulation; and
2. The licensee does not have a customer
relationship with the consumer; or
(b) A notice has been provided by an
affiliated licensee, as long as the notice clearly identifies all licensees to
whom the notice applies and is accurate with respect to the licensee and the
other institutions.
(3)
General rule of when the licensee establishes a customer relationship. A
licensee establishes a customer relationship when the licensee and the consumer
enter into a continuing relationship.
(4) Existing customers. If an existing
customer obtains a new insurance product or service from a licensee that is to
be used primarily for personal, family or household purposes, the licensee
satisfies the initial notice requirements of subsection (1) of this section as
follows:
(a) The licensee may provide a
revised policy notice, under Section 9 of this administrative regulation, that
covers the customer's new insurance product or service; or
(b) If the initial, revised, or annual notice
that the licensee most recently provided to that customer was accurate with
respect to the new insurance product or service, the licensee shall not be
required to provide a new privacy notice under subsection (1) of this
section.
(5) Exceptions
to allow subsequent delivery of notice. A licensee may provide the initial
notice required by subsection (1) of this section within a reasonable time
after the licensee establishes a customer relationship if:
(a) Establishing the customer relationship is
not at the customer's election; or
(b) Providing notice not later than when the
licensee establishes a customer relationship would substantially delay the
customer's transaction and the customer agrees to receive the notice at a later
time.
(6) Delivery. When
a licensee is required to deliver an initial privacy notice by this section,
the licensee shall deliver it according to Section 10 of this administrative
regulation. If the licensee uses a short-form initial notice for noncustomers
according to Section 7(4) of this administrative regulation, the licensee may
deliver its privacy notice according to Section 7(4)(c) of this administrative
regulation.
Section 6.
Annual Privacy Notice to Customers Required.
(1) General rule. Except as provided in
subsection (3) of this section, a licensee shall provide a clear and
conspicuous notice to customers that accurately reflects its privacy policies
and practices not less than annually during the continuation of the customer
relationship. A licensee may define the twelve (12) consecutive month period,
but the licensee shall apply it to the customer on a consistent
basis.
(2) Termination of customer
relationship. A licensee shall not be required to provide an annual notice to a
former customer.
(3) Exception to
annual privacy notice requirement.
(a) A
licensee that provides nonpublic personal information to nonaffiliated third
parties only in accordance with Sections 14, 15, or 16 of this administrative
regulation and has not changed its policies and practices with regard to
disclosing nonpublic personal information from the policies and practices that
were disclosed in the most recent disclosure sent to consumers in accordance
with this section or Section 5 of this administrative regulation shall not be
required to provide an annual disclosure under this section.
(b) If a licensee fails to comply with any of
the exception criteria described in paragraph (a) of this subsection, the
licensee shall be required to provide the annual privacy notice required under
subsection (1) of this section.
(4) Delivery. When a licensee is required by
this section to deliver an annual privacy notice, the licensee shall deliver it
according to Section 10 of this administrative regulation.
Section 7. Information to be Included in
Privacy Notices.
(1) General rule. The
initial, annual and revised privacy notices that a licensee provides under
Sections 5, 6, and 9 of this administrative regulation shall include each of
the following items of information, in addition to any other information the
licensee wishes to provide, that applies to the licensee and to the consumers
to whom the licensee sends its privacy notice:
(a) The categories of nonpublic personal
financial information that the licensee collects;
(b) The categories of nonpublic personal
financial information that the licensee discloses;
(c) The categories of affiliates and
nonaffiliated third parties to whom the licensee discloses nonpublic personal
financial information, other than those parties to whom the licensee discloses
information under Sections 15 and 16 of this administrative
regulation;
(d) The categories of
nonpublic personal financial information about the licensee's former customers
that the licensee discloses and the categories of affiliates and nonaffiliated
third parties to whom the licensee discloses nonpublic personal financial
information about the licensee's former customers, other than those parties to
whom the licensee discloses information under Sections 15 and 16 of this
administrative regulation;
(e) If a
licensee discloses nonpublic personal financial information to a nonaffiliated
third party under Section 14 of this administrative regulation, and no other
exception in Sections 15 and 16 of this administrative regulation applies to
that disclosure, a separate description of the categories of information the
licensee discloses and the categories of third parties with whom the licensee
has contracted;
(f) An explanation
of the consumer's right under Section 11 of this administrative regulation to
opt out of the disclosure of nonpublic personal financial information to
nonaffiliated third parties, including the methods by which the consumer may
exercise that right at that time;
(g) Any disclosures that the licensee makes
under 15 U.S.C.
1681a(d)(2)(A)(iii) of the
federal Fair Credit Reporting Act (that is, notices regarding the ability to
opt out of disclosures of information among affiliates);
(h) The licensee's policies and practices
with respect to protecting the confidentiality and security of nonpublic
personal information; and
(i) Any
disclosure that the licensee makes under subsection (2) of this
section.
(2) Description
of parties subject to exceptions. If a licensee discloses nonpublic personal
financial information as authorized under Sections 15 and 16 of this
administrative regulation, the licensee shall not be required to list those
exceptions in the initial or annual privacy notices required by Sections 5 and
6 of this administrative regulation. If describing the categories of parties to
whom disclosure is made, the licensee shall state only that it makes
disclosures to other affiliated or nonaffiliated third parties, as applicable,
as permitted by law.
(3) Examples.
(a) Categories of nonpublic personal
financial information that the licensee collects. A licensee shall satisfy the
requirement to categorize the nonpublic personal financial information it
collects if the licensee categorizes it according to the source of the
information, as applicable:
1. Information
from the consumer;
2. Information
about the consumer's transactions with the licensee or its
affiliates;
3. Information about
the consumer's transactions with nonaffiliated third parties; and
4. Information from a consumer reporting
agency.
(b) Categories
of nonpublic personal financial information a licensee discloses.
1. A licensee shall satisfy the requirement
to categorize nonpublic personal financial information it discloses if the
licensee categorizes the information according to source, as described in
subparagraph 3 of this paragraph, as applicable, and provides a few examples to
illustrate the types of information in each category. These may include:
a. Information from the consumer, including
application information, such as assets and income and identifying information,
such as name, address, and Social Security number;
b. Transaction information, such as
information about balances, payment history, and parties to the transaction;
and
c. Information from consumer
reports, such as a consumer's creditworthiness and credit history.
2. A licensee shall not categorize
the information that it discloses by using only general terms, such as
transaction information about the consumer.
3. If a licensee reserves the right to
disclose all of the nonpublic personal financial information about consumers
that it collects, the licensee may simply state that fact without describing
the categories or examples of nonpublic personal information that the licensee
discloses.
(c)
Categories of affiliates and nonaffiliated third parties to whom the licensee
discloses.
1. A licensee shall satisfy the
requirement to categorize the affiliates and nonaffiliated third parties to
which the licensee discloses nonpublic personal financial information about
consumers if the licensee identifies the types of businesses in which they
engage.
2. Types of businesses may
be described by general terms only if the licensee uses a few illustrative
examples of significant lines of business. For example, a licensee may use the
term "financial products or services" if it includes appropriate examples of
significant lines of businesses, such as life insurer, automobile insurer,
consumer banking, or securities brokerage.
3. A licensee also may categorize the
affiliates and nonaffiliated third parties to which it discloses nonpublic
personal financial information about consumers using more detailed
categories.
4. Disclosures under
exception for service providers and joint marketers. If a licensee discloses
nonpublic personal financial information under the exception in Section 14 of
this administrative regulation to a nonaffiliated third party to market
products or services that it offers alone or jointly with another financial
institution, the licensee shall satisfy the disclosure requirement of
subsection (1)(e) of this section if it:
a.
Lists the categories of nonpublic personal financial information it discloses,
using the same categories and examples the licensee used to meet the
requirements of subsection (1)(b) of this section, as applicable; and
b. States whether the third party is a
service provider that performs marketing services on the licensee's behalf or
on behalf of the licensee and another financial institution; or a financial
institution with whom the licensee has a joint marketing agreement.
5. Simplified notices. If a
licensee does not disclose, and does not wish to reserve the right to disclose,
nonpublic personal financial information about customers or former customers to
affiliates or nonaffiliated third parties except as authorized under Sections
15 and 16 of this administrative regulation, the licensee may simply state that
fact, in addition to the information it shall provide under subsections (1)(a),
(h), (i), and (2) of this section.
6. Confidentiality and security. A licensee
describes its policies and practices with respect to protecting the
confidentiality and security of nonpublic personal financial information if it
does both of the following:
a. Describes in
general terms who is authorized to have access to the information;
and
b. States whether the licensee
has security practices and procedures in place to ensure the confidentiality of
the information in accordance with the licensee's policy. The licensee shall
not be required to describe technical information about the safeguards it
uses.
(4) Short-form initial notice with opt-out
notice for noncustomers.
(a) A licensee may
satisfy the initial notice requirements in Sections 5(1)(b) and 8(3) of this
administrative regulation for a consumer who is not a customer by providing a
short-form initial notice at the same time as the licensee delivers an opt-out
notice as required in Section 8 of this administrative regulation.
(b) A short-form initial notice shall:
1. Be clear and conspicuous;
2. State that the licensee's privacy notice
is available upon request; and
3.
Explain a reasonable means by which the consumer may obtain that
notice.
(c) The licensee
shall deliver its short-form initial notice according to Section 10 of this
administrative regulation. The licensee is not required to deliver its privacy
notice with its short-form initial notice. The licensee instead may simply
provide the consumer a reasonable means to obtain its privacy notice. If a
consumer who receives the licensee's short-form notice requests the licensee's
privacy notice, the licensee shall deliver its privacy notice according to
Section 10 of this administrative regulation.
(5) Future disclosures. The licensee's notice
may include:
(a) Categories of nonpublic
personal financial information that the licensee reserves the right to disclose
in the future, but does not currently disclose; and
(b) Categories of affiliates or nonaffiliated
third parties to whom the licensee reserves the right in the future to
disclose, but to whom the licensee does not currently disclose, nonpublic
personal financial information.
Section 8. Form of Opt-out Notice to
Consumers and Opt-out Methods.
(1)
(a) Form of opt-out notice. If a licensee is
required to provide an opt-out notice under Section 11(1) of this
administrative regulation, it shall provide a clear and conspicuous notice to
each of its consumers that accurately explains the right to opt out under that
section. The notice shall state:
1. That the
licensee discloses or reserves the right to disclose nonpublic personal
financial information about its consumer to a nonaffiliated third
party;
2. That the consumer has the
right to opt out of that disclosure; and
3. A reasonable means by which the consumer
may exercise the opt-out right.
(b)
1.
Adequate opt-out notice. A licensee provides adequate notice that the consumer
can opt out of the disclosure of nonpublic personal financial information to a
nonaffiliated third party if the licensee:
a.
Identifies all of the categories of nonpublic personal financial information
that it discloses or reserves the right to disclose, and all of the categories
of nonaffiliated third parties to which the licensee discloses the information,
as described in Section 7(1)(b) and (c) of this administrative regulation, and
states that the consumer may opt out of the disclosure of that information;
and
b. Identifies the insurance
products or services that the consumer obtains from the licensee, either singly
or jointly, to which the opt-out direction would apply.
2. 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 may call to opt out.
3. Unreasonable opt-out means. A licensee
does not provide a reasonable means of opting out if:
a. The only means of opting out is for the
consumer to write his or her own letter to exercise that opt-out right;
or
b. The only means of opting out
as described in any notice subsequent to the initial notice, is to use a
check-off box that the licensee provided with the initial notice but did not
include with the subsequent notice.
4. Specific opt-out means. A licensee may
require each consumer to opt out through a specific means, as long as that
means is reasonable for that consumer.
(2) Same form as initial notice permitted. A
licensee may provide the opt-out notice together with or on the same written or
electronic form as the initial notice the licensee provides in accordance with
Section 5 of this administrative regulation.
(3) Initial notice required when opt-out
notice delivered subsequent to initial notice. If a licensee provides the
opt-out notice later than required for the initial notice in accordance with
Section 5 of this administrative regulation, the licensee shall also include a
copy of the initial notice with the opt-out notice in writing or, if the
consumer agrees, electronically.
(4) Joint relationships.
(a) If two (2) or more consumers jointly
obtain an insurance product or service from a licensee, the licensee may
provide a single opt-out notice. The licensee's opt-out notice shall explain
how the licensee will treat an opt-out direction by a joint consumer.
(b) Any of the joint consumers may exercise
the right to opt out. The licensee may either:
1. Treat an opt-out direction by a joint
consumer as applying to all of the associated joint consumers; or
2. Permit each joint consumer to opt out
separately.
(c) If a
licensee permits each joint consumer to opt out separately, the licensee shall
permit one (1) of the joint consumers to opt out on behalf of all of the joint
consumers.
(d) A licensee may not
require all joint consumers to opt out before it implements any opt-out
direction.
(5) Time to
comply with opt out. A licensee shall comply with a consumer's opt-out
direction as soon as reasonably practicable after the licensee receives
it.
(6) Continuing right to opt
out. A consumer may exercise the right to opt out at any time.
(7) Duration of consumer's opt-out direction.
(a) A consumer's direction to opt out under
this section is effective until the consumer revokes it in writing or, if the
consumer agrees, electronically.
(b) When a customer relationship terminates,
the customer's opt-out direction continues to apply to the nonpublic personal
financial information that the licensee collected during or related to that
relationship. If the individual subsequently establishes a new customer
relationship with the licensee, the opt-out direction that applied to the
former relationship does not apply to the new relationship.
(8) Delivery. When a licensee is
required to deliver an opt-out notice by this section, the licensee shall
deliver it according to Section 10 of this administrative regulation.
Section 9. Revised Privacy
Notices.
(1) General rule. Except as otherwise
authorized in this administrative regulation, a licensee shall not, directly or
through an affiliate, disclose any nonpublic personal financial information
about a consumer to a nonaffiliated third party other than as described in the
initial notice that the licensee provided to that consumer under Section 5 of
this administrative regulation, unless:
(a)
The licensee has provided to the consumer a clear and conspicuous revised
notice that accurately describes its policies and practices;
(b) The licensee has provided to the consumer
a new opt-out notice;
(c) The
licensee has given the consumer a reasonable opportunity, before the licensee
discloses the information to the nonaffiliated third party, to opt out of the
disclosure; and
(d) The consumer
does not opt out.
(2)
(a) Except as otherwise permitted by Sections
14, 15, and 16 of this administrative regulation, a licensee shall provide a
revised notice before it:
1. Discloses a new
category of nonpublic personal financial information to any nonaffiliated third
party;
2. Discloses nonpublic
personal financial information to a new category of nonaffiliated third party;
or
3. Discloses nonpublic personal
financial information about a former customer to a nonaffiliated third party,
if that former customer has not had the opportunity to exercise an opt-out
right regarding that disclosure.
(b) A revised notice is not required if the
licensee discloses nonpublic personal financial information to a new
nonaffiliated third party that the licensee adequately described in its prior
notice.
Section
10. Delivery.
(1) How to provide
notices. A licensee shall provide any notices that this administrative
regulation requires so that each consumer may reasonably be expected to receive
actual notice in writing or, if the consumer agrees, electronically.
(2)
(a)
Illustrations of reasonable expectation of actual notice. A licensee may
reasonably expect that a consumer will receive actual notice if the licensee:
1. Hand-delivers a printed copy of the notice
to the consumer;
2. Mails a printed
copy of the notice to the last known address of the consumer separately, or in
a policy, billing, or other written communication;
3. For a consumer who conducts transactions
electronically, posts the notice on the electronic site and requires the
consumer to acknowledge receipt of the notice as a necessary step to obtaining
a particular insurance product or service; or
4. For an isolated transaction with a
consumer, such as the licensee providing an insurance quote or selling the
consumer travel insurance, posts the notice and requires the consumer to
acknowledge receipt of the notice as a necessary step to obtaining the
particular insurance product or service.
(b) Illustrations of unreasonable expectation
of actual notice. A licensee shall not reasonably expect that a consumer will
receive actual notice of its privacy policies and practices if it:
1. Only posts a sign in its office or
generally publishes advertisements of its privacy policies and practices;
or
2. Sends the notice via
electronic mail to a consumer who does not obtain an insurance product or
service from the licensee electronically.
(3) Annual notices only. A licensee may
reasonably expect that a customer will receive actual notice of the licensee's
annual privacy notice if:
(a) The customer
uses the licensee's Web site to access insurance products and services
electronically and agrees to receive notices at the Web site and the licensee
posts its current privacy notice continuously in a clear and conspicuous manner
on the Web site; or
(b) The
customer has requested that the licensee refrain from sending any information
regarding the customer relationship, and the licensee's current privacy notice
remains available to the customer upon request.
(4) Oral description of notice insufficient.
A licensee may not provide any notice required by this administrative
regulation solely by orally explaining the notice, either in person or over the
telephone.
(5) Retention or
accessibility of notices for customers.
(a)
For customers only, a licensee shall provide the initial notice required by
Section 5(1)(a) of this administrative regulation, the annual notice required
by Section 6(1) of this administrative regulation, and the revised notice
required by Section 9 of this administrative regulation so that the customer
may retain them or obtain them later in writing or, if the customer agrees,
electronically.
(b) Examples of
retention or accessibility. A licensee provides a privacy notice to the
customer so that the customer may retain it or obtain it later if the licensee:
1. Hand-delivers a printed copy of the notice
to the customer;
2. Mails a printed
copy of the notice to the last known address of the customer; or
3. Makes its current privacy notice available
on a Web site, or a link to another Web site, for the customer who obtains an
insurance product or service electronically and agrees to receive the notice at
the Web site.
(6) Joint notice with other financial
institutions. A licensee may provide a joint notice from the licensee and one
(1) or more of its affiliates or other financial institutions, as identified in
the notice, as long as the notice is accurate with respect to the licensee and
the other institutions. A licensee also may provide a notice on behalf of
another financial institution.
(7)
Joint relationships. If two (2) or more consumers jointly obtain an insurance
product or service from a licensee, the licensee may satisfy the initial,
annual, and revised notice requirements of Sections 5(1), 6(1), and 9 of this
administrative regulation, respectively, by providing one (1) notice to those
consumers jointly.
Section
11. Limits on Disclosure of Nonpublic Personal Financial
Information to Nonaffiliated Third Parties.
(1)
(a)
Conditions for disclosure. Except as otherwise authorized in this
administrative regulation, a licensee may not, directly or through any
affiliate, disclose any nonpublic personal financial information about a
consumer to a nonaffiliated third party unless:
1. The licensee has provided to the consumer
an initial notice as required under Section 5 of this administrative
regulation;
2. The licensee has
provided to the consumer an opt-out notice as required in Section 8 of this
administrative regulation;
3. The
licensee has given the consumer a reasonable opportunity, before it discloses
the information to the nonaffiliated third party, to opt out of the disclosure;
and
4. The consumer does not opt
out.
(b) A licensee
provides a consumer with a reasonable opportunity to opt out if:
1. By mail. The licensee mails the notices
required in subsection (1)(a) of this section to the consumer and allows the
consumer to opt out by mailing a form, calling a toll-free telephone number, or
any other reasonable means within thirty (30) days from the date the licensee
mailed the notices.
2. By
electronic means. A customer opens an on-line account with a licensee and
agrees to receive the notices required in subsection (1)(a) of this section
electronically, and the licensee allows the customer to opt out by any
reasonable means within thirty (30) days after the date that the customer
acknowledges receipt of the notices in conjunction with opening the
account.
3. Isolated transaction
with consumer. For an isolated transaction such as providing the consumer with
an insurance quote, a licensee provides the consumer with a reasonable
opportunity to opt out if the licensee provides the notices required in
subsection (1)(a) of this section at the time of the transaction and requests
that the consumer decide, as a necessary part of the transaction, whether to
opt out before completing the transaction.
(2) Application of opt out to all consumers
and all nonpublic personal financial information.
(a) A licensee shall comply with this
section, regardless of whether the licensee and the consumer have established a
customer relationship.
(b) Unless a
licensee complies with this section, the licensee shall not, directly or
through any affiliate, disclose any nonpublic personal financial information
about a consumer that the licensee has collected, regardless of whether the
licensee collected it before or after receiving the direction to opt out from
the consumer.
(3)
Partial opt out. A licensee may allow a consumer to select certain nonpublic
personal financial information or certain nonaffiliated third parties with
respect to which the consumer wishes to opt out.
Section 12. Limits on Redisclosure and Reuse
of Nonpublic Personal Financial Information.
(1)
(a)
Information the licensee receives under an exception. If a licensee receives
nonpublic personal financial information from a nonaffiliated financial
institution under an exception in Section 15 or 16 of this administrative
regulation, the licensee's disclosure and use of that information shall be
limited as follows:
1. The licensee may
disclose the information to the affiliates of the financial institution from
which the licensee received the information;
2. The licensee may disclose the information
to its affiliates, but the licensee's affiliates may, in turn, disclose and use
the information only to the extent that the licensee may disclose and use the
information; and
3. The licensee
may disclose and use the information in the ordinary course of business to
carry out the activity covered by the exception under which the licensee
received the information.
(b) If a licensee receives information from a
nonaffiliated financial institution for claims settlement purposes, the
licensee shall disclose the information for fraud prevention, or in response to
a properly authorized subpoena. The licensee may not disclose that information
to a third party for marketing purposes or use that information for its own
marketing purposes.
(2)
(a) Information a licensee receives outside
of an exception. If a licensee receives nonpublic personal financial
information from a nonaffiliated financial institution other than under an
exception in Section 15 or 16 of this administrative regulation, the licensee
may disclose the information only:
1. To the
affiliates of the financial institution from which the licensee received the
information;
2. To its affiliates,
but its affiliates may, in turn, disclose the information only to the extent
that the licensee may disclose the information; and
3. To any other person, if the disclosure
would be lawful if made directly to that person by the financial institution
from which the licensee received the information.
(b) If a licensee obtains a customer list
from a nonaffiliated financial institution outside of the exceptions in Section
15 or 16 of this administrative regulation:
1.
The licensee may use that list for its own purposes; and
2. The licensee may disclose that list to
another nonaffiliated third party only if the financial institution from which
the licensee purchased the list may have lawfully disclosed the list to that
third party. The licensee may disclose the list in accordance with the privacy
policy of the financial institution from which the licensee received the list,
as limited by the opt-out direction of each consumer whose nonpublic personal
financial information the licensee intends to disclose, and the licensee may
disclose the list in accordance with an exception in Section 15 or 16 of this
administrative regulation, such as to the licensee's attorneys or
accountants.
(3) Information a licensee discloses under an
exception. If a licensee discloses nonpublic personal financial information to
a nonaffiliated third party under an exception in Section 15 or 16 of this
administrative regulation, the third party may disclose and use that
information only as follows:
(a) The third
party may disclose the information to the licensee's affiliates;
(b) The third party may disclose the
information to its affiliates, but its affiliates may, in turn, disclose and
use the information only to the extent that the third party may disclose and
use the information; and
(c) The
third party may disclose and use the information pursuant to an exception in
Section 15 or 16 of this administrative regulation in the ordinary course of
business to carry out the activity covered by the exception under which it
received the information.
(4) Information a licensee discloses outside
of an exception. If a licensee discloses nonpublic personal financial
information to a nonaffiliated third party other than under an exception in
Section 15 or 16 of this administrative regulation, the third party may
disclose the information only:
(a) To the
licensee's affiliates;
(b) To the
third party's affiliates, but the third party's affiliates, in turn, may
disclose the information only to the extent the third party can disclose the
information; and
(c) To any other
person, if the disclosure would be lawful if the licensee made it directly to
that person.
Section
13. Limits on Sharing Account Number Information for Marketing
Purposes.
(1) General prohibition on
disclosure of account numbers. A licensee shall not, directly or through an
affiliate, disclose, other than to a consumer reporting agency, a policy number
or similar form of access number or access code for a consumer's policy or
transaction account to any nonaffiliated third party for use in telemarketing,
direct mail marketing, or other marketing through electronic mail to the
consumer.
(2) Exceptions.
Subsection (1) of this section shall not apply if a licensee discloses a policy
number or similar form of access number or access code:
(a) To the licensee's service provider solely
in order to perform marketing for the licensee's own products or services, as
long as the service provider is not authorized to directly initiate charges to
the account;
(b) To a licensee who
is a producer solely in order to perform marketing for the licensee's own
products or services; or
(c) To a
participant in an affinity or similar program where the participants in the
program are identified to the customer when the customer enters into the
program.
(3)
(a) A policy number, or similar form of
access number or access code, does not include a number or code in an encrypted
form, as long as the licensee does not provide the recipient with a means to
decode the number or code.
(b) For
the purposes of this section, a policy or transaction account is an account
other than a deposit account or a credit card account. A policy or transaction
account does not include an account to which third parties cannot initiate
charges.
Section
14. Exception to Opt-out Requirements for Disclosure of Nonpublic
Personal Financial Information for Service Providers and Joint Marketing.
(1) General rule.
(a) The opt-out requirements in Sections 8
and 11 of this administrative regulation shall not apply when a licensee
provides nonpublic personal financial information to a nonaffiliated third
party to perform services for the licensee or functions on the licensee's
behalf, if the licensee:
1. Provides the
initial notice in accordance with Section 5 of this administrative regulation;
and
2. Enters into a contractual
agreement with the third party that prohibits the third party from disclosing
or using the information other than to carry out the purposes for which the
licensee disclosed the information, including use under an exception in Section
15 or 16 of this administrative regulation in the ordinary course of business
to carry out those purposes.
(b) If a licensee discloses nonpublic
personal financial information under this section to a financial institution
with which the licensee performs joint marketing, the licensee's contractual
agreement with that institution shall meet the requirements of paragraph (a)2
of this subsection if:
1. It prohibits the
institution from disclosing or using the nonpublic personal financial
information except as necessary to carry out the joint marketing; or
2. Is under an exception in Section 15 or 16
of this administrative regulation in the ordinary course of business to carry
out that joint marketing.
(2) Service may include joint marketing. The
services a nonaffiliated third party performs for a licensee under subsection
(1) of this section may include marketing of the licensee's own products or
services or marketing of financial products or services offered pursuant to
joint agreements between the licensee and one (1) or more financial
institutions.
Section
15. Exceptions to Notice and Opt-out Requirements for Disclosure
of Nonpublic Personal Financial Information for Processing and Servicing
Transactions. Exceptions for processing transactions at consumer's request. The
requirements for initial notice in Section 5(1)(b) of this administrative
regulation, the opt out in Sections 8 and 11 of this administrative regulation,
and for the service providers and joint marketing in Section 14 of this
administrative regulation shall 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 a licensee, or with another entity as part of a private label
credit card program or other extension of credit on behalf of such
entity;
(3) A proposed or actual
securitization, secondary market sale, including sales of servicing rights, or
similar transaction related to a transaction of the consumer; or
(4) Reinsurance or stop loss or excess loss
insurance.
Section 16.
Other Exceptions to Notice and Opt-out Requirements for Disclosure of Nonpublic
Personal Financial Information.
(1) Exceptions
to opt-out requirements. The requirements for initial notice to consumers in
Section 5(1)(b) of this administrative regulation, the opt out in Sections 8
and 11 of this administrative regulation, and for the service providers and
joint marketing in Section 14 of this administrative regulation shall not apply
if a licensee discloses nonpublic personal financial information:
(a) With the consent or at the direction of
the consumer, if the consumer has not revoked the consent or
direction;
(b)
1. To protect the confidentiality or security
of a licensee's records pertaining to the consumer, service, product, or
transaction;
2. To protect against
or prevent actual or potential fraud or unauthorized transactions;
3. For required institutional risk control or
for resolving consumer disputes or inquiries;
4. To persons holding a legal or beneficial
interest relating to the consumer; or
5. To persons acting in a fiduciary or
representative capacity on behalf of the consumer;
(c) To provide information to insurance rate
advisory organizations, guaranty funds or agencies, agencies that are rating a
licensee, persons that are assessing the licensee's compliance with industry
standards, and the licensee's attorneys, accountants, and auditors;
(d) To the extent specifically permitted or
required under other provisions of law and in accordance with the federal Right
to Financial Privacy Act of 1978,
12 U.S.C.
3401 to
3422, to law enforcement agencies,
including the Federal Reserve Board, Office of the Comptroller of the Currency,
Federal Deposit Insurance Corporation, Office of Thrift Supervision, National
Credit Union Administration, the Securities and Exchange Commission, the
Secretary of the Treasury, with respect to
31 U.S.C.
5311 to
5330, Records and Reports on
Monetary Instruments and Transactions, and
12 U.S.C.
1951 to
1959, Financial Recordkeeping, a
state insurance authority, and the Federal Trade Commission, self-regulatory
organizations or for an investigation on a matter related to public
safety;
(e)
1. To a consumer reporting agency in
accordance with the federal Fair Credit Reporting Act,
15 U.S.C.
1681 to
1681u; or
2. From a consumer report reported by a
consumer reporting agency;
(f) In connection with a proposed or actual
sale, merger, transfer, or exchange of all or a portion of a business or
operating unit if the disclosure of nonpublic personal financial information
concerns solely consumers of the business or unit;
(g)
1. To
comply with federal, state or local laws, rules and other applicable legal
requirements;
2. To comply with a
properly authorized civil, criminal or regulatory investigation, or subpoena or
summons by federal, state or local authorities;
3. To respond to judicial process or
government regulatory authorities having jurisdiction over a licensee for
examination, compliance or other purposes as authorized by law; or
4. For purposes related to the replacement of
a group benefit plan, a group health plan, a group welfare plan or a workers'
compensation plan.
(2) Revocation of consent. A consumer may
revoke consent by subsequently exercising the right to opt out of future
disclosures of nonpublic personal information as permitted under Section 8(6)
of this administrative regulation.
(3) Licensees in liquidation or
rehabilitation according to KRS Chapter 304.33 shall be exempt from the notice
provisions of this administrative regulation.
Section 17. Privacy Notices to Group
Policyholders. Unless a licensee is providing privacy notices directly to
covered individuals described in Section 22 of this administrative regulation,
a licensee shall provide initial, annual, and revised notices to the plan
sponsor, group or blanket insurance policyholder or group annuity contract
holder, or workers' compensation policyholder, in the manner described in
Sections 5 through 10 of this administrative regulation, describing the
licensee's privacy practices with respect to nonpublic personal information
about individuals covered under the policies, contracts, or plans.
Section 18. When Authorization Required for
Disclosure of Nonpublic Personal Health Information.
(1) A licensee shall not disclose nonpublic
personal health information about a consumer or customer unless an
authorization is obtained from the consumer or customer about whom such
information is sought to be disclosed.
(2) Nothing in this section shall prohibit,
restrict or require an authorization for the disclosure of such information by
a licensee for the performance of the following insurance functions by or on
behalf of the licensee: claims administration; claims adjustment and
management; detection, investigation or reporting of actual or potential fraud;
misrepresentation or criminal activity; underwriting; policy placement or
issuance; loss control; ratemaking and guaranty fund function; reinsurance and
excess loss insurance; risk management; case management; disease management;
quality assurance; quality improvement; performance evaluation; provider
credentialing verification; utilization review; peer review activities;
actuarial, scientific, medical or public policy research; grievance procedures;
internal administration of compliance, managerial, and information systems;
policyholder service function; auditing; reporting; database security;
administration of consumer disputes and inquiries; external accreditation
standards; the replacement of a group benefit plan or workers' compensation
policy or program; activities in connection with a sale, merger, transfer, or
exchange of all or part of a business or operating unit; any activity that
permits disclosure without authorization pursuant to the federal Health
Insurance Portability and Accountability Act privacy rule which is promulgated
by the U.S. Department of Health and Human Services at
45 C.F.R.
160 to
164; disclosure that is required,
or is one (1) of the lawful or appropriate methods, to enforce the licensee's
rights or the rights of other persons engaged in carrying out a transaction or
providing a product or service that a consumer requests or authorizes; and any
activity otherwise permitted by law, required pursuant to governmental
reporting authority, or to comply with legal process.
(3) Additional insurance functions may be
added with the approval of the commissioner to the extent they are necessary
for appropriate performance of insurance functions and are fair and reasonable
to the interest of consumers.
Section
19. Authorizations.
(1) A valid
authorization to disclose nonpublic personal health information pursuant to
Section 18 of this administrative regulation shall be in written or electronic
form and shall contain the following:
(a) The
identity of the consumer or customer who is the subject of the nonpublic
personal health information;
(b) A
general description of the types of information to be disclosed;
(c) General descriptions of the parties to
whom disclosure shall be made, the purpose of the disclosure, and how the
information will be used;
(d) The
signature of the affected consumer or customer or the individual who is legally
empowered to grant authority and the date signed;
(e) Notice of the length of time for which
the authorization is valid, not to exceed twenty-four (24) months;
and
(f) Notice that the consumer or
customer may revoke the authorization at any time and the procedure for making
a revocation.
(2) A
consumer or customer who is subject of nonpublic personal health information
may revoke an authorization provided pursuant to this section at any time,
subject to the rights of an individual who acted in reliance on the
authorization prior to notice of the revocation.
(3) A licensee shall retain the authorization
or copy thereof in the record of the affected individual.
Section 20. Authorization Request Delivery. A
request for authorization and an authorization form may be delivered to a
consumer or customer as part of an opt-out notice pursuant to Section 10 of
this administrative regulation, provided that the request and the authorization
form are clear and conspicuous. An authorization form is not required to be
delivered to the consumer or customer or included in any other notices unless
the licensee intends to disclose protected health information pursuant to
Section 18(1) of this administrative regulation.
Section 21. Relationship to Federal Rules.
Regardless of whether a licensee is subject to the federal Health Insurance
Portability and Accountability Act ("HIPAA") privacy rule as promulgated by the
U.S. Department of Health and Human Services at
45 C.F.R.
160 to
164, if a licensee complies with
all requirements of 45
C.F.R. 160 to
164, the licensee shall not be
subject to Sections 18, 19, and 20 of this administrative regulation.
Section 22. Nondiscrimination and Exemption
from Notice and Opt Out Requirements.
(1) A
licensee shall not unfairly discriminate against any consumer or customer
because that consumer or customer has opted out from the disclosure or has not
granted authorization for the disclosure of his or her nonpublic personal
financial information pursuant to the provisions of this administrative
regulation.
(2) A licensee shall
not be subject to the notice and opt-out requirements for nonpublic personal
financial information established in this administrative regulation if:
(a) The licensee is an employee, agent, or
other representative of another licensee, "the principal";
(b) The principal otherwise complies with,
and provides the notices required by, the provisions of this administrative
regulation; and
(c) The licensee
does not disclose any nonpublic personal financial information to any person
other than the principal or its affiliates in a manner permitted by this
administrative regulation.
(3) Pursuant to subsection (2) of this
section, "licensee" shall also include an unauthorized insurer that accepts
business placed through a licensed surplus broker in Kentucky, but only for the
surplus lines placements placed pursuant to
KRS
304.10.
(4) A surplus lines broker or surplus lines
insurer shall be in compliance with the notice and opt-out requirements for
nonpublic personal financial information established in this administrative
regulation if:
(a) The broker or insurer does
not disclose nonpublic personal information of a consumer or a customer to
nonaffiliated third parties for any purpose, including joint servicing or
marketing under Section 14 of this administrative regulation, except as
permitted by Section 15 or 16 of this administrative regulation; and
(b) The broker or insurer delivers a notice
to a consumer when a customer relationship is established on which the
following is printed in sixteen (16) point type: "PRIVACY NOTICE - NEITHER THE
U.S. BROKERS THAT HANDLED THIS INSURANCE NOR THE INSURERS THAT HAVE
UNDERWRITTEN THIS INSURANCE WILL DISCLOSE NONPUBLIC PERSONAL INFORMATION
CONCERNING THE BUYER TO NONAFFILIATES OF THE BROKERS OR INSURERS EXCEPT AS
PERMITTED BY LAW."
Section
23. Violation. A violation of this administrative regulation shall
constitute an unfair trade practice in the business of insurance and shall
subject the licensee to a civil penalty authorized by
KRS
304.99-020.
Section 24. Incorporation by Reference.
(1) The following material is incorporated by
reference:
(a) PVCY-01, "Sample Clauses and
Examples", (Edition 11/01); and
(b)
"Model Privacy Forms & General Instructions", May 2017.
(2) This material may be
inspected, copied, or obtained, subject to applicable copyright law, at the
Kentucky Office of Insurance, 215 West Main Street, Frankfort, Kentucky 40601,
Monday through Friday, 8 a.m. to 4:30 p.m.
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