Last year California approved the most comprehensive privacy law known as the Consumer Privacy Act of 2018. Assembly Bill number 375 goes in effect on January 1st, 2020. “The bill would grant a consumer a right to request a business to disclose the categories and specific pieces of personal information that it collects about the consumer, the categories of sources from which that information is collected, the business purposes for collecting or selling the information, and the categories of 3rd parties with which the information is shared.” Like many businesses, insurance is requires personal information. I started working on this newsletter then realized that trying to get it done in one session was very ambitious and would make me minimize the importance of this momentous bill. Not only will this law change the way insurance is done but it will have major ramifications on every industry.
At its core the bill is meant to help the consumer know what information is collected by a business, how the collect, and what they are going to do with it. The consumer will have the right to request deletion of this information within the guidelines provided by the California Consumer Privacy Act (CCPA).
In addition to knowing what information is collected the business must “disclose the categories of information that it collects and categories of information and the identity of 3rd parties to which the information was sold or disclosed.” This will be important for the insurance industry as it brings about much needed transparency. Insureds should know what is happening with the information they are providing, whether it is to a licensed professional or to website that acts as an intermediary to obtain insurance.
CCPA also creates rules around the idea of opting-out. Ultimately businesses will not be allowed to discriminate against consumers who want to protect their privacy. CCPA also provides businesses authorization “to offer financial incentives for collection of personal information.” This will be the framework for new and creative ways for individuals to monetize their data ownership and is the foundation of our insureBio project.
This bill will provide broad enforcement powers to the Attorney General of California and would affect all people that live in California or do business with California based companies. Since Silicon Valley is the epicenter of the technology revolution, I can say with certainty that nearly everyone in the world will be affected by this law. A new Consumer Privacy Fund will also be setup to support the purposes of CCPA and its enforcement. I can imagine this will become one of the largest government controlled funds in the near future since it will also become the storage place for all associated penalties of future violations.
Historically, California has been on the forefront of privacy rights. “In 1972, California voters amended the California Constitution to include the right of privacy among the “inalienable” rights of all people.” Since then they have amplified this law with legislation such as Online Privacy Protection Act, the Privacy Rights for California Minors in the Digital World Act, and Shine the Light. The purpose of the laws was to give Californians the ‘who, what, where and when’ of how businesses handle consumers’ personal information.
There is a reason why privacy and data security is on all of our minds. “The unauthorized disclosure of personal information and the loss of privacy can have devastating effects for individuals, ranging from financial fraud, identity theft, and unnecessary costs to personal time and finances, to destruction of property, harassment, reputational damage, emotional stress, and even potential physical harm.” This law creates a framework and hopefully an effective way to control personal information by ensuring the following rights:
1. What information is being collected
2. Whether it is being sold or shared and with whom
3. The ability to say no to the sale of personal information
4. Access to the information collected
5. Equal service and price, even if you exercise your privacy rights
So this is just a summary of the first 3 pages of this bill. I will try and condense and bring out the important parts that I am guessing none of us are prepared for. Let me know what you think! I look forward to sharing part 2 with you next week.
