Texas General Lines — Property and CasualtyTexas Laws and RegulationsMedium
A Texas resident is applying for an auto insurance policy. The insurer inquires about the applicant's credit score and uses this information to determine eligibility and premium rates. Which federal law primarily governs how this personal financial information must be protected and used by the insurer?
- AFair Credit Reporting Act (FCRA)
- BHealth Insurance Portability and Accountability Act (HIPAA)
- CDodd-Frank Wall Street Reform and Consumer Protection Act
- DGramm-Leach-Bliley Act (GLBA)
Show answer & explanationAnswer & explanation
Correct answer: D. Gramm-Leach-Bliley Act (GLBA)
The Gramm-Leach-Bliley Act (GLBA) primarily governs the collection, disclosure, and protection of consumers' nonpublic personal information by financial institutions, including insurance companies. It mandates privacy notices and safeguards.
Why the other options are wrong
- A. FCRA governs how consumer credit information is collected, used, and accuracy maintained, but GLBA specifically addresses privacy in financial services.
- B. HIPAA primarily deals with the privacy of health information.
- C. Dodd-Frank is a broader financial reform law, but GLBA is more specific to privacy of consumer financial data by insurers.
Gramm-Leach-Bliley Act (GLBA)
Federal law requiring financial institutions, including insurers, to explain their information-sharing practices to customers and safeguard sensitive data.
- Mandates privacy notices to consumers.
- Requires safeguards for nonpublic personal information.
- Applies to financial institutions, including insurance companies.
Memory trick: GLBA guards granular data, ensuring privacy for financial strata.