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The Federal Trade Commission has approved an alternative procedure for the production of customer information in connection with the FTC study on the effect of credit-based insurance scores on the availability and affordability of homeowners insurance. The FTC is required to conduct the study under Section 215 of the Fair and Accurate Credit Transactions Act (FACTA).

In May 2008 the Commission authorized the use of compulsory process under Section 6(b) of the FTC Act and FACTA to obtain information for the study. Following a public comment period, in December 2008 the Commission issued orders requiring the nine largest private providers of homeowners insurance to produce information for the study, including policyholder data. The orders allowed each insurance company to submit data and documents containing consumers’ personally identifiable information (PII) to a third party or third parties selected by the FTC. The third parties must certify that their data security practices will protect the data they receive.

The Commission approved the alternative procedure on April 17, 2009. The alternative procedure responds to the concerns that some state laws may require insurance companies to remain responsible for the PII of their policyholders. The companies choosing to use the alternative procedure are required to send their data and documents to the FTC with an associated unique identifying number; the data and documents, however, will not include any PII, such as policyholder name, street address, Social Security number, and date of birth.

The Commission vote to approve the alternative procedure for production of PII, as provided in the modified orders, was 4-0.

(FYI Compulsory Process)