South Carolina Personal Lines Practice Exam

What was the purpose of the Gramm-Leach-Bliley Act?

1. Enhance banking competition

2. Protect private customer information

3. Reduce insurance premiums

4. Facilitate insurance mergers

The correct answer is: Protect private customer information

The Gramm-Leach-Bliley Act, enacted in 1999, primarily aimed to protect the privacy of consumers' personal financial information. This legislation established a framework for financial institutions to follow, requiring them to disclose their privacy policies to customers and offering consumers the option to opt-out of having their information shared with non-affiliated third parties. By focusing on the protection of private customer information, the act sought to enhance the confidentiality and security of sensitive financial data, strengthening consumer trust in financial institutions. This was particularly crucial as the lines between banking, securities, and insurance industries blurred due to financial deregulation, necessitating clear consumer protections. The other choices do not align with the core intent of the Gramm-Leach-Bliley Act. While enhancing competition in banking, reducing insurance premiums, or facilitating mergers can be aspects of broader financial regulatory discussions, they were not the primary focus of this specific legislation.