Privacy Panic

Although Insurance & Technology has been covering the technology implications of privacy regulations for well over a year, it had seemed to me a rather abstract concept until the past few weeks. That's when I started receiving notices about "your right to privacy" from various insurance companies with which I have coverage.

My usual habit is to toss anything inserted into a checking or premium statement, or any other kind of "official" correspondence from a financial institution (so much for cross-selling). The only reason I didn't reflexively discard these inserts is because they actually caught my eye—no doubt because of I&T's ongoing analysis of the privacy issue.

But have I read through any of these treatises yet? Have I paid attention to any deadlines, disclaimers or warnings?Am I wondering about the financial institutions from which I have not yet received a privacy notice? Obviously I wouldn't even have to raise these questions if the answer was yes. And, while I guess as an "expert" I should know better, I'm probably in good company. There usually is a disconnect between people's rhetoric and their actions. Most consumers probably would say they don't want financial institutions, the government or travel companies (just to name a few possibilities) knowing too much about them. But I'd be curious to know the real response rate to all the "right-to-privacy" correspondence that's gone out in the past month (the American Bankers Association estimates there will probably be close to half-a-billion notices mailed to consumers in advance of the July Gramm-Leach-Bliley privacy compliance deadline).

My husband loves it when we receive targeted promotions from a retailer or hotel based on past shopping or travel activities. But he freaks if, thanks to caller ID, I answer the phone, "Hi honey!" when he calls me at work—for some reason that makes him feel paranoid. Similarly, do policyholders understand that faster claims turnaround, customized products and real-time transactions would not be available if their insurers weren't able to collect and analyze a tremendous amount of vital information about their incomes, marital status and lifestyle?

This is not to say that privacy concerns are overstated or bogus, or that financial institutions should not have to address customers' privacy rights. But there will be a long—possibly never-ending—and difficult process of education, challenge, expense, rethinking and redeployment to find some sort of balance. That should give me plenty of time to read through my mail.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio