Insurance policyholders' information protected under new law

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(The Center Square) – A new law in California adds accountability measures for insurance companies to ensure policyholders’ information isn’t sold or distributed to third parties.

The law - Senate Bill 354, introduced by Senate President Pro Tempore Monique Limón, D-Santa Barbara - establishes new standards for the collection and use of policyholders’ personal information. In particular, insurance companies and their third-party service providers are prohibited from selling the personal information of their customers, keeps them from sharing personal information without the customer's consent and requires companies to have policies for when personal information will be deleted.

This law updates the state’s 50-year-old regulations regarding insurance customers’ information, according to Limón’s office.

“Californians should not have to wonder who has their personal information,” Limón said. “SB 354 gives consumers control of their most sensitive data and holds insurers and their vendors accountable for protecting that data.”

Limón’s office did not respond to The Center Square's request for further comment.

According to the bill analysis, the California Department of Insurance reported that the law will cost $34,500 a year to implement in both fiscal year 2026-27 and 2027-28. That amount could be offset by fines collected from insurance companies and third-party service providers, and the department might have to spend more money to hire staff to carry out enforcement and administrative activities related to the law.

Insurance Commissioner Richard Lara sponsored SB 354 because, he said, Californians deserve to know how their personal information is being collected, used and shared. Lara said Californians deserve meaningful protections when companies fail to follow the law.

“This new law brings California’s insurance privacy protections into the modern era by giving consumers greater transparency and control over their personal information while creating clear, enforceable standards for insurers and the third parties they work with,” Gabriel Sanchez, strategic communications chief for the California Department of Insurance, told The Center Square via email. “Commissioner Lara’s goal is straightforward: Californians should be able to engage with the insurance marketplace with confidence that their personal information is being handled responsibly and that there is accountability when it isn’t.”

Lara was not available for an interview for this story.

In written comments before SB 354 was passed, opponents warned the bill would create complex regulations that would conflict with current rules for the insurance industry.

“As a result, consumers that do business with a particular entity that is subject to both frameworks will not have one set of rights, but rather they will need to navigate between the regimes which will depend on the specific data at issue with regard to a specific transaction,” the California Chamber of Commerce wrote in opposing comments in the bill analysis. “By expanding the law in this way, we are concerned that any entity that touches personal information could potentially be implicated, including cloud-computing companies, document management platforms, payment and wire service providers, communication platforms, customer relationship management providers, and similar vendors.”

The California Chamber of Commerce was unreachable on Thursday. Several insurance companies The Center Square reached out to this week also did not respond.