Insurers prepare for new privacy legislation

By Daniela Cambone | June 20 2003 03:57PM

Though the issue of privacy is not new to insurance companies, the industry is still preparing to greet the Personal Information Protection and Electronic Documents Act on January 1, 2004. Insurers say they are well prepared and that privacy guidelines have been in place for quite some time.

Jim McInnis, Chief Privacy Officer at Sun Life Financial says that handling personal information is key for the insurer and that safeguarding customer information is nothing new.

“The federal legislation coming into effect in Canada for provincially regulated organizations in January 2004 is not the only privacy legislation in place: Quebec has had privacy legislation in place since 1994,” he states.

At present, Quebec is the only province with a personal data protection law in effect that applies to the provincially regulated private sector.

However, the insurer is still working to prepare for the January deadline. Some of the tasks it is currently carrying out include analyzing internal processes that handle personal information, reviewing processes for obtaining and storing customer consent and training employees. Mr. McInnis explains that training sessions have been held with certain groups of employees and that further targeted training is in development.

With the new act, Mr. McInnis also expects changes to the insurance industry as a whole. “Although the concept of privacy is not new to us, we must review our processes and refresh where necessary. As awareness builds among consumers, we can expect to have more questions and challenges from our customers. Some provincial legislation is targeting health information as a separate class of personal information requiring special handling. For example the Alberta Health Information Act affects some processes such as claims under group drug plans.”

Over at Manulife Financial, the insurer is also tying up lose-ends and preparing for PIPEDA. Brenda Meyer, Director of Compliance Management for the Canadian Division, says that the insurer already has guidelines in place and is fine-tuning aspects of its privacy regulations.

“The focus will be on our openness, looking at enhancing customer communications, making the information that we make available to the customer a little clearer and more comprehensive and we are trying to anticipate what their questions might be.”

As for any issues which may arise out of the act, Ms. Meyer says that there is a concern of how it will be interpreted. “There is always that period where people have to find the right stride and the right balance in interpreting the laws, it is usually not black and white,” she says.

Ms. Meyer adds that the PIPEDA may provide a more levelled playing field across the industry. “People are going to be moving down a similar road.”

Tom Nunn, Director of Media Relations for Manulife agrees. “The legislation will set a standard that brings everyone into the same sort of sphere. It does open up communications around this issue and has been doing so within the industry as well.”

Jean Bélanger, Manager, Group Life and Health Compliance at Standard Life Canada, agrees that privacy protection is not something new to the insurance industry. “The CLHIA (Canadian Life and Health Associatioin) issued guidelines back in the 1980s on that, it is something that has always been very important for the insurance industry because we are dealing with very sensitive information for individuals, it is their health and it is their financial information.”

Added costs

As for disadvantages which may arise, Mr. Bélanger highlights that the issue of cost will surface. “There is some cost associated with it and these costs at the end of the day will be transferred to the client, and it is not just for our company it is the industry as well. We have to revise our forms another time and that cost will be passed on.” He adds that the costs have not been calculated yet.

When asked why the federal government imposed the law, Mr. Bélanger looks to the reason of international commerce. “It was to be able to exchange information with other countries since Canada is a big exporter of products and services. The European Union (EU) has privacy laws and they were starting to make matters difficult for Canada when we would transfer information.”

He explains that EU law requires guarantees that the information transferred will be protected properly. “In my personal opinion, it was really to make sure that Canada will stay competitive on the world stage,” he states.

Al Kaminskas, a Partner with the employee benefits firm, Net Worth Employee Benefits has a different interpretation. Mr. Kaminskas hypothesizes that it is linked to the AIDS epidemic. “Prior to that there were no socially unacceptable diseases. Who cared if you had diabetes? Who cared if you had cancer? But once the reports started producing information that could isolate an employee with AIDS, I think that is when the issue of confidentiality really hit the industry,” he explains. “I could see a drug utilization report, which told me which employee was using which drug and how much they were using and that was the tip of the iceberg.”

Though the Act will be affecting all industries in Canada, Mr. Kaminskas says that the insurance industry will be particularly affected. “I think the insurance industry is going to have a significant effect because of the reporting and the ability to cost products in an efficient manner.”

Mr. Kaminskas uses the example of purchasing disability insurance. He says that presently a client has to give their name, social insurance number and salary which is all confidential. With the act, the broker now has to ask the client to sign a release letter so they can obtain the personal insurance information.