GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
H	1
HOUSE BILL 349*

 
 
Short Title:	Insurance Information Privacy-AB.	()	
Sponsors:	Representatives Hurley and Dockham (Primary Sponsors).	
Referred to:	Insurance.	
March 1, 2001

A BILL TO BE ENTITLED
AN ACT to make the north carolina insurance information and privacy protection act comply with the consumer information privacy requirements in the federal gramm-leach-bliley act, public law 106-102.

The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 58‑39‑10 reads as rewritten:
"§ 58‑39‑10.  Scope.
(a)	The obligations imposed by this Article shall apply to those insurance institutions, agents, or insurance‑support organizations that, on or after July 1, 1982:
(1)	In the case of life, health, or disability insurance:
a.	Collect, receive, or maintain information in connection with insurance transactions that pertains to natural persons who are residents of this State; or
b.	Engage in insurance transactions with applicants, individuals, or policyholders who are residents of this State; and
(2)	In the case of property or casualty insurance:
a.	Collect, receive, or maintain information in connection with insurance transactions involving policies, contracts, or certificates of insurance delivered, issued for delivery, or renewed in this State; 
b.	Engage in insurance transactions involving policies, contracts, or certificates of insurance delivered, issued for delivery, or renewed in this State; or
c.	Engage in transactions involving mortgage guaranty insurance where the mortgage guaranty policies, contracts, or certificates of insurance are delivered, issued for delivery, or renewed in this State.
(b)	The rights granted by this Article shall extend to:
(1)	In the case of life, health, or disability insurance, the following persons who are residents of this State:
a.	Natural persons who are the subject of information collected, received, or maintained in connection with insurance transactions; and
b.	Applicants, individuals, or policyholders who engage in or seek to engage in insurance transactions;
(2)	In the case of property or casualty insurance, the following persons:
a.	Natural persons who are the subject of information collected, received, or maintained in connection with insurance transactions involving policies, contracts, or certificates of insurance delivered, issued for delivery, or renewed in this State; and
b.	Applicants, individuals, or policyholders who engage in or seek to engage in (i) insurance transactions involving policies, contracts, or certificates of insurance delivered, issued for delivery, or renewed in this  State; or (ii) mortgage guaranty insurance transactions involving policies, contracts, or certificates of insurance delivered, issued for delivery, or renewed in this State.
(c)	For purposes of this section, a person shall be considered a resident of this State if the person's last known mailing address, as shown in the records of the insurance institution, agent, or insurance‑support organization, is located in this State.
(d)	Notwithstanding subsections (a) and (b) of this section, this Article shall not apply to information collected from the public records of a governmental authority and maintained by an insurance institution or its representatives for the purpose of insuring the title to real property located in this State."
SECTION 2.  G.S. 58‑39‑15(1) reads as rewritten:
"(1)	"Adverse underwriting decision" means:
a.	Any of the following actions with respect to insurance transactions involving insurance coverage that is individually underwritten:
1.	A declination of insurance coverage;
2.	A termination of insurance coverage;
3.	Failure of an agent to apply for insurance coverage with a specific insurance institution that an agent represents and that is requested by an applicant;
4.	In the case of a property or casualty insurance coverage:
I.	Placement by an insurance institution or agent of a risk with a residual market  mechanism, an unauthorized insurer, or an insurance institution that specializes in substandard risks; or
II.	The charging of a higher rate on the basis of information that differs from that which the applicant or policyholder furnished; or
5.	In the case of a life, health, or disability insurance coverage, an offer to insure at higher than standard rates.
b.	Notwithstanding subdivision (1)a of this section, the following actions shall not be considered adverse underwriting decisions, but the insurance institution or agent responsible for their occurrence shall nevertheless provide the applicant or policyholder with the specific reason or reasons for their occurrence:
1.	The termination of an individual policy form on a class or statewide basis;
2.	A declination of insurance coverage solely because such coverage is not available on a class or statewide basis; or
3.	The rescission of a policy."
SECTION 3.  G.S. 58‑39‑15(9) reads as rewritten:
"(9)	"Individual" means any natural person who:
a.	In the case of property or casualty insurance, is a past, present, or proposed named insured or certificate holder;
b.	In the case of life or accident and health insurance, is a past, present, or proposed principal insured or certificate holder;
c.	Is a past, present or proposed policy owner;
d.	Is a past or present applicant;
e.	Is a past or present claimant; f.	Derived, derives, or is proposed to derive insurance coverage under an insurance policy or certificate subject to this Article; or
g.	Is the subject of personal information collected or maintained by an insurance institution, agent, or insurance-support organization in connection with mortgage guaranty insurance."
SECTION 4.  G.S. 58‑39‑25 reads as rewritten:
"§ 58‑39‑25.  Notice of insurance information practices.
(a)	An insurance institution or agent shall provide a notice of information practices to all applicants or policyholders in connection with insurance transactions as provided in this section:
(1)	In the case of an application for insurance a notice shall be provided no later than:
a.	At the time of the delivery of the insurance policy or certificate when personal information is collected only from the applicant or from public records; or
b.	At the time the collection of personal information is initiated when personal information is collected from a source other than the applicant or public records;
(2)	In the case of a policy that has been issued, a notice shall be provided 		 not less than annually while the policy is in force; or
(3)	In the case of a policy reinstatement or change in insurance benefits, a notice shall be provided no later than the time a request for a policy reinstatement or change in insurance benefits is received by the insurance  institution.
(b)	The notice required by subsection (a) of this section shall be in writing and shall state:
(1)	Whether personal information may be collected from persons other than the individual or individuals proposed for  coverage.(2)	The types of personal information that may be collected and the types of sources and investigative techniques that may be used to collect such  information.
(3)	The types of disclosures identified in subsections (2), (3), (4), (5), (6), (9), (11), (12), and (14) of G.S. 58‑39‑75 and the circumstances under which such disclosures may be made without prior authorization: Provided, however, only those circumstances need be described that occur with such frequency as to indicate a general business practice.
(4)	A description of the rights established under G.S. 58‑39‑45 and 58‑39‑50 and the manner in which such rights may be  exercised.
(5)	That information obtained from a report prepared by an insurance‑support organization may be retained by the insurance‑support organization and disclosed to other persons.
(6)	The policies and practices of the insurance institution or agent with respect to disclosing nonpublic personal information to nonaffiliated third parties, other than agents of the insurance institution or agent, consistent with Section 502 of P.L. 106-102, the Gramm-Leach-Bliley Act, and including:
a.	The categories of persons to whom the information is or may be disclosed, other than the persons to whom the information may be provided pursuant to Section 502(e) of P.L. 106-102, the Gramm-Leach-Bliley Act.
b.	The policies and practices of the insurance institution or agent with respect to disclosing of nonpublic personal information of persons who have ceased to be customers of the insurance institution or agent.
(7)	The policies that the insurance institution or agent maintains to protect the confidentiality and security of nonpublic personal information in accordance with Section 501 of P.L. 106-102, the Gramm-Leach-Bliley Act.
(8)	The disclosures required, if any, under Section 603(d)(2)(A)(iii) of the Fair Credit Reporting Act.
(c)					
For the purposes of this section, 'applicant' or 'policyholder' includes a person who applies for or obtains coverage under a group insurance contract, regardless of whether that person's coverage is individually underwritten. An insurance institution or agent that does not disclose personal information about an applicant or policyholder under a group insurance contract, as permitted by G.S. 58-39-75(11), may satisfy any notice requirement that otherwise exists under this section with respect to the applicant or policyholder by providing a notice of information practices to the holder of the group insurance contract.
(d)	The obligations imposed by this section upon an insurance institution or agent may be satisfied by another insurance institution or agent authorized to act on its behalf."
SECTION 5.  Article 39 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-39-26.  Exception for title insurance.
 A title insurance company shall give notice of its insurance information practices under G.S. 58-39-25 only at the time the final policy of title insurance is issued and is not subject to any annual notice requirement thereafter."
SECTION 6.  G.S. 58‑39‑75(1) reads as rewritten:
"(1)	With the written authorization of the individual, provided:
a.	If such authorization is submitted by another insurance institution, agent, or insurance‑support organization, the authorization meets the requirements of G.S. 58‑39‑35; or
b.	If such authorization is submitted by a person other than an insurance institution, agent, or insurance‑support organization, the authorization meets the requirements  of G.S. 58-39-35 and is:
1.	Dated;
2.	Signed by the individual; and
3.	Obtained one year or less before the date a disclosure is sought pursuant to this paragraph; or".
SECTION 7.  G.S. 58‑39‑75(18) reads as rewritten:
"(18)	To a lienholder, mortgagee, assignee, lessor, or other person shown on the records of an insurance institution or agent as having a legal or beneficial interest in a policy of  insurance only if:
a.	No medical record information is disclosed unless the disclosure would otherwise be permitted by this section; and
b.	The information disclosed is limited to that which is reasonably necessary to permit such person to protect its interest in such policy; or".
SECTION 8.  Article 39 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-39-76.  Limits on sharing account number information for marketing purposes.
(a)  General Prohibition on Disclosure of Account Numbers. – An insurance institution, insurance agent, or insurance-support organization shall not disclose, other than to a consumer reporting agency, an account number or similar form of access number or access code for a credit card account, deposit account, or transaction account of a consumer to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other marketing through electronic mail to the consumer.
(b)  Definitions.—As used in this section:
(1)	"Account number" means an account 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 insurance institution, insurance agent, or insurance-support organization does not provide the recipient with a means to decode the number or code.
(2)	"Transaction account" means an account other than a deposit account or credit card account. A transaction account does not include an account to which third parties cannot initiate charges."
SECTION 9.  If any section or provision of this act is declared unconstitutional, preempted, or otherwise invalid by the courts, it does not affect the validity of the act as a whole or any part other than the part so declared to be unconstitutional, preempted, or otherwise invalid.
SECTION 10.  This act is effective when it becomes law.