There are many sectors of the U.S. economy that are not subject to rigorous privacy regulations. The insurance industry is not one of them. Our industry has a long history of protecting the privacy interests of its consumers and adding insurers, agents, and brokers to new legislation moving through Congress is counterproductive.

The American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies, the Independent Insurance Agents & Brokers of America, and The Council of Insurance Agents and Brokers believe the House Committee on Energy and Commerce’s “American Data Privacy and Protection Act” (ADPPA) can foster a constructive discussion of many key privacy issues, however, we have some significant concerns about the practical impact the legislation will have on both consumers and businesses.

The financial services industry, including the insurance industry, was the first sector of the economy to come under comprehensive nationwide privacy regulation more than 20 years ago under the Gramm Leach Bliley Act. Since then, states have adopted insurance privacy laws across the country. As a result, consumer complaints about the privacy practices of insurers, agents, and brokers are rare.

As the old adage goes, avoid trying to fix what is not broken. We therefore encourage Congress to exempt insurers, agents, and brokers from the scope of the ADPPA. Additionally, national regulation of insurance, without robust state law preemption, could leave consumers vulnerable to inconsistent standards. Furthermore, the ADPPA could exacerbate and perpetuate more lawsuit abuse in the U.S. through bill provisions that expand private right of action for encouraging frivolous litigation against business owners.

Spiraling litigation costs already affect everyone—individuals, families, businesses, communities, and the economy. These costs are apparent in goods and services. A significant factor in this rise in costs is the increasing rate of plaintiff attorney involvement in everyday disputes and transactions. Often attorney involvement delays the resolution of disputes, increases costs, and results in lower net settlement amounts for claimants.

When adjusting for increases in GDP and population, the costs of the U.S. tort system to businesses and families is $529 billion per year or $4,323 per year per household. This amounts to 2.3 percent of the nation’s GDP. Yet only 57 cents of every dollar are paid in compensation to plaintiffs. This would likely mean an increase in claims costs for insurers, which in turn could lead to higher insurance rates for consumers.

This tort tax extends beyond the direct cost of lawsuits. A study sponsored by Citizens Against Lawsuit Abuse found that the ripple effect of the tort tax impacts 2.2 million jobs nationally and wipes out more than $435 billion in economic activity.

This legislation could make a bad lawsuit abuse situation worse. Now is not the time to add to legal uncertainty and costs by adding new incentives to sue business owners who already are faced with major challenges with understanding and managing privacy risk.

We commend the committee for its interest in this important issue of protecting privacy and we pledge to be of assistance to help make the bill achieve its intended goal in an appropriately targeted way.


The authors are the leaders of the APCIA, NAMIC, the Big “I” and the CIAB.

APCIA and NAMIC represent approximately 90 percent of the home, auto, and business insurance marketplace.

The Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing more than 25,000 agency locations united under the Trusted Choice brand.

The CIAB is the premier association for the leading commercial insurance and employee benefits intermediaries around the world.