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Wednesday, September 28, 2016

Federal Trade Commission Officials Encourage Data Breach Notification Legislation

Following news last week of a massive hack affecting an estimated 500 million Yahoo customers, all three FTC commissioners yesterday voiced their support for a federal-level law that would set notification requirements after consumer data breaches.

“Data security is one of the most significant issues we face as a nation,” said FTC Chairwoman Edith Ramirez, testifying at a Senate Commerce Committee hearing. “I think Congress needs to take action in this area… I am in favor of legislation and believe it’s something that ought to happen.” She recommended a 30-to-60-day timeframe for companies to be required to inform their customers about a data breach.

Monday, September 26, 2016

ABA Issues Compliance Checklist, Resource Page for MLA Changes

With the compliance deadline for changes to the Department of Defense’s Military Lending Act rules just a week away, ABA is issuing a compliance checklist for bankers and unveiling a new resource webpage combining all ABA resources on the MLA. The MLA amendments -- which extend MLA restrictions to cover credit cards, lines of credit, installment loans and deposit advances offered to service members and their dependents -- take effect Oct. 3 (though credit cards have a later compliance deadline of October 2017).

The compliance checklist offers bankers a quick guide to major compliance considerations in advance of the rule, which has far-reaching implications for lending to service members and their dependents, and a link to additional compliance information that highlights critical areas. ABA’s resource page also includes links to members-only staff analyses, webinars and briefings, news updates, comment letters and other relevant materials to facilitate compliance.

Meanwhile, ABA this afternoon will offer a webinar on surviving MLA compliance, covering the types of loans covered, how and when to identify covered borrowers, how to provide oral disclosures and other topics.

While the final rule was released more than a year ago, it took until August of this year for the Pentagon to issue an interpretive rule clarifying numerous points of confusion and uncertainty that have hindered compliance officers’ ability to prepare. ABA has led the advocacy effort urging DoD to respond to bankers’ concerns and continues to seek guidance and clarification on key issues.

Download the checklist.

Access the webpage.

Register for the webinar.

View the MLA rule highlights.

Wednesday, September 14, 2016

ABA, Trades Outline Principles for Flood Insurance Reform

In a letter to Senate Banking Committee leadership on Monday, ABA and other financial services and insurance trade associations outlined principles for regulatory reform with respect to flood insurance. The groups urged lawmakers to seek solutions that would increase the percentage of property owners who purchase flood insurance and called for long-term reauthorization of the National Flood Insurance Program, which is set to expire next September.

Specifically, the groups recommended that Congress focus on improving the customer experience through better disclosures, more policyholder education, reaffirmation of reimbursement rates, and simplified underwriting and claims handling. They also encouraged lawmakers to consider enhancing and fostering market oriented solutions; resolve issues related to mitigation; and ensure adequate mapping funding to enable consumers, communities and the private sector to accurately evaluate, mitigate and price flood risk.

Read the letter.

For more information, contact ABA's Joe Pigg or Sarah Ferman.

Thursday, September 8, 2016

How Google Hopes to Use Driverless Cars To Shift Personal Liability to Product Liability

By Guy Weismantel, Vice President of Marketing at Vertafore

Drivers will one day be able to nap, browse social media, or watch their favorite shows on their daily commute. The car of the future will allow users to enter a location into the vehicle’s interface and be whisked off to their destination. We already have front crash prevention systems, technology that allows cars to self-park, and if you're lucky enough to have a high-end model, you already enjoy a hands-free technology experience on the highway. Now Google Inc. is planning to roll out the first fully autonomous car in 2017.

Interestingly, Google recently killed off its car insurance comparison tools, which the company introduced only last year. According to Google, this was a result of the tools that weren't as successful as the company had hoped. But could there be another plan in the works? You bet there is! And I have an idea...

Google asked the United States Congress to create special provisions that would authorize the company to bring to market a vehicle with no pedals or steering wheel (Associated Press). If this bid is successful, it would mean that standard insurance coverage might be incentivized to shift from personal liability to product liability. Let that sink in for a moment.

Google isn't interested in consumers personal auto lines. Why? Well, they’re betting they can make more money removing humans from the driving equation than they would selling ads for insurance. And to be completely honest, that’s not a bad bet. Google is famous for “moonshots,” but with all of the other driverless car technology hitting the market, this is no longer farfetched. Google is already testing their driverless cars in Austin, Silicon Valley, and Seattle. They want to introduce this car next year.

If Google's bid to have special provisions created by Congress is successful, cars without steering wheels and pedals could become a reality, and in turn, a shift from personal liability to product liability would become advantageous.

Tim Bzowey, head of home and auto at RBC Insurance in Canada made a good point in his presentation at the Insurance Institute of Ontario’s annual At the forefront event saying, “The personal computer was going to eliminate paper,” Bzowey said during the presentation, titled When Things Don’t Go Bump in the Night: Our Future With(out) Auto Insurance. “It didn’t do a very good job of that. You have example after example of innovation and it creates new opportunities. So while one door closes, another one opens, and for me, it’s our willingness to grasp those new opportunities that come forward.”

The moral of the story is: The companies that fail to come up with innovative policies to cover the new technologies may soon find themselves struggling to keep pace.

Read more about Google's sunsetting of its comparison tools.

Vertafore delivers cloud-based insurance software and services that transform the business of insurance. With the largest customer-base in the industry, more than 20,000 agencies and carriers leverage Vertafore’s insurance solutions that are built on today’s most advanced cloud, mobile, and information technology platforms. Learn more and contact Vertafore.

Tuesday, August 30, 2016

Fewer Privacy Notices Required for Bank Insurance Licensees

Yesterday, the National Association of Insurance Commissioners (NAIC adopted a model bulletin to implement recent amendments to the Gramm-Leach-Bliley Act’s privacy provisions (the so-called “FAST Act,” which was enacted on December 4, 2015).

The FAST Act eliminates the requirement that financial institutions (including banks, insurance companies and insurance agencies, if applicable) provide annual privacy notices to their customers. Once a state adopts the NAIC’s model bulletin, insurance entities licensed in the state will no longer have to provide the annual privacy notices if they meet the following conditions:
  1. the privacy notice does not provide the customer with an opportunity to “opt out” of the disclosure of nonpublic personal information (NPI) to nonaffiliated third parties; and
  2. the insurance company or insurance agency (if applicable) has not revised its privacy notice with regard to disclosing NPI to a nonaffiliated third party since it issued its most recent privacy notice. The elimination of the requirement to provide an annual privacy notice would be available to an insurance company or an insurance agency that has a joint marketing agreement in place for the disclosure of customer NPI to a nonaffiliated bank.

    Note that in most cases, this relief will not be relevant to an insurance agency, which often is able to rely on an insurance company’s provision of privacy notices, instead of having to provide its own privacy notice.
This action is consistent with the Consumer Financial Protection Bureau’s (CFPB) recent proposal to modify Regulation P (12 C.F.R. Part 1016), which implements the Gramm-Leach-Bliley Act’s privacy provisions with respect to financial institutions regulated by the Federal prudential regulators, such as banks.

Given this action, here’s where we currently stand on the requirement that a financial institution provide annual privacy notices (assuming is satisfies the two requirements set forth in the first paragraph):
  1. Banks will no longer be required to provide annual privacy notices once the CFPB issues its final rule to amend Regulation P.
  2. Insurance companies, and insurance agencies that provide privacy notices, will no longer be required to provide annual privacy notices to their customers once a state adopts the NAIC’s model bulletin, with an important caveat: Some states may need to amend their regulations to effect the change in the regulatory requirement (a bulletin may not suffice), so insurance licensees should check with the their state regulators to determine what is, and is not, permitted.
  3. Financial institutions within a holding company that provide joint privacy notices (such as a bank that has a subsidiary insurance agency) will need to check both Regulation P and state insurance law before they stop jointly delivering annual privacy notices to customers of the various entities within the holding company.
If you have any question regarding this issue, please contact Sarah Ferman at sferman@aba.com.