Politics Is More Important to Technology Than You Realize
October 2001
E-mail and Web-based customer call centers
have dramatically improved communication between insurers, agencies, and customers.
But there are many possible political and governmental impediments to Web-based
technology involving spam, privacy, e-signatures, and database protection.
by Steve
Anderson
SteveAnderson.com,
Inc.
For some time, we have been telling agents and their companies about the
need to expand their customer service options to include electronic forms of
communication. This can be accomplished by using e-mail or a Web-based customer
contact center. Insurance companies are increasingly moving their sales, support
and marketing activities to the Web, delivering faster, simpler, and easier
agent and customer experience at a lower cost. A growing network of independent
software companies and technology providers are developing and providing these
applications to help make these e-commerce activities a reality.
As a result, the Internet is growing to be a common communications medium
by which many financial services companies send and receive information between
them and their customers. This high degree of electronic activity has generated
an increasing large number of congressional legislative and federal regulatory
proposals to govern its use. Many of these proposals, if enacted into law, could
significantly limit and/or alter how you are able to interact with your customers
electronically.
This was made very clear for us last June when we attended a meeting at the
Capital Building in Washington, DC, along with representatives from nine other
companies with an interest in insurance technology issues. We were joined by
a member of Congress and several Congressional staff members, one of whom was
largely responsible for drafting the Gramm-Leach-Bliley Act (GLBA). This meeting
was a real eye opener and wake-up call.
Members of the House and Senate, as well as their staff, are creating, voting
on and passing legislation with very little, if any, information or business
insight when dealing with insurance technology or e-commerce issues. The Representative
who attended the meeting, when talking about anti-SPAMlegislation that he voted
for said, "I hope we got it right. If not we'll have to change it later." When
asked how soon the legislation could be changed, he responded: "Two or three
years." That's a long time!
The scope of what Congress is looking at legislating is quite broad. There
are several issues that will affect how companies do business using the Internet
in the years ahead. Some of these issues are detailed below.
Spam
Unsolicited commercial e-mail—or Spam—remains a very sensitive issue in Congress.
Two competing measures (HR 718) have passed out of the House Energy and Commerce
Committee and the House Judiciary Committee. By far, the best bill for the financial
services industry is the narrow approach taken in the Judiciary Committee. This
issue came to the attention of Congress because of a desire to stop pornographic
and unsolicited e-mail. Unfortunately, the attempt in the House Commerce Committee
became so broad that it now stifles legitimate e-commerce and business applications,
especially insurance and financial services. Additionally, its enforcement provisions
give broad and unworkable private rights of action, and places too much power
in the hands of the Internet service providers (ISPs).
The Judiciary Committee bill is more narrowly drafted and far preferable.
The two House versions must now be reconciled before they are brought to the
House floor for a vote. This could happen in two ways: The House Rules Committee
could rewrite the bills and send them to the floor or the House Leadership could
request the two committees meet and present an agreed upon version to House
Rules. Speaker Hastert has chosen the second route. The new Senate Commerce
Committee chairman, Sen. Fritz Hollings (D-SC) has not indicated a strong desire
to work on this legislation, but that sentiment could change if the House passes
a good bill.
Privacy
More than 50 "privacy" bills have been introduced in the 107th Congress,
so it's clear that this issue is on the minds of members of Congress. There
are many diverse constituencies that have weighed in on this topic, and this
sentiment will only grow. A tremendous amount of focus has been placed on implementing
the privacy provisions of the GLBA, the Financial Services Modernization Act
of 1999. This was the only "privacy" train leaving the station and has created
quite a stir. There is no federal preemption in the GLBA, and many states legislative
bodies, led by the Association of Attorneys General, have looked at passing
more stringent privacy laws.
This lack of a preemption affects technology companies because they can be
required to modify existing and new products—databases, etc.—causing them to
deal with the state-specific rules in each state as products are deployed. Obviously,
this will slow down new product deployment and increase cost.
Database Protection
There are at least seven versions of proposed legislation that deal with
this issue. Some in Congress are expressing the need to provide extraordinary
electronic security for personal data maintained and handled within the business
databases.
Senator Ron Wyden (R-Or) recently held hearings where witnesses testified
that the only way to regulate database security was for insurance companies
to assign risk ratings for each database product, providing, in effect, a recommendation
(or not) for each commercial database product. Another witness suggested that
developers of individual products and/or their companies be held personally
liable for the security of the data their product handles. We will definitely
hear more on this important issue.
E-Signature
The Electronic Signature Act was signed into law a year ago. House and Senate
staffs are revisiting the rather broad provisions of the law with an eye toward
correcting or refining it based on the experiences of the financial services
industry. There should be increased activity in Congress this fall.
Internet Taxation This is a very volatile e-commerce issue. The Internet
tax moratorium expires this fall, and the longer Congress delays action, the
more likely that an extension of the original law will be passed. Notwithstanding,
the loss of dwindling revenues at the state level is of growing concern in statehouses
across America. There are forces in Congress that want laws providing for Internet
business to reach across state lines to collect and distribute state tax revenues
from anyone who purchases anything on the Internet, including insurance. The
impact on technology companies is huge in virtually every part of the insurance
arena.
Conclusion
Many agent and carrier associations already have very well-respected and
active lobbying organizations watching over the goings-on in Washington. However,
by their own admission, they do not have the resources or the expertise to help
Congress draft e-commerce legislation that does not hurt businesses. The Insurance
Technology Coalition has been formed to partner with existing industry organizations
to provide Congress members with the information and expertise they will need
so that any legislation that is proposed is well thought out and does not unintentionally
harm those whom it is trying to protect. As you are making your technology plans
for the future, don't forget to factor in how politics may impact your business
plan.
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