Insurance companies today operate in a data-intensive environment. Personal information is collected at every stage of an application, underwriting decision, claims interaction, and customer service exchange. In 2025, California legislators introduced a bill that would significantly reshape how insurance licensees and their third-party service providers handle consumer data. California SB 354 , the Insurance Consumer Privacy Protection Act of 2025, aims to modernize privacy rights and boost transparency and accountability in the insurance market.
California SB 354 is proposed legislation intended to create a comprehensive consumer privacy framework specific to the insurance industry. The bill would expand beyond existing laws such as the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) by establishing additional requirements for how personal information is collected, used, shared, and retained by insurers and their third-party service providers.
Under the bill, consumers would receive enhanced privacy rights, including the ability to access, correct, or delete personal data held by insurers. SB 354 would cover sensitive identifiers (like Social Security numbers, IP addresses, and biometric data) and would require insurers to provide clear, easy-to-understand privacy notices. It also emphasizes opt-in consent for data uses unrelated to insurance transactions.
If enacted, SB 354 would affect almost every aspect of the insurance value chain. Insurers and their third-party partners, including outsourcing firms, would need to adapt to heightened obligations around:
This means carriers must revisit internal processes, privacy notices, systems architecture, and vendor contracts. For operations that currently rely on large volumes of policyholder data for analytics, underwriting, or marketing, the opt-in requirements alone could necessitate extensive changes in workflows and customer touchpoints. The expanded scope of privacy rights also increases compliance burdens and complexity, particularly where personal information is processed by outsourced teams or cloud-based systems.
As of mid-2025, California SB 354 is progressing through the legislative process. The bill has passed committee reviews, including in the Senate Insurance and Judiciary committees, and has been referred for further consideration, but it was not yet enacted into law at the time of this writing.
Industry groups, consumer advocates, and regulatory stakeholders continue to weigh in, with debates around the bill’s scope, impact on business operations, and balance between consumer protection and administrative complexity. The bill’s evolving status means insurers need to stay informed and prepare for possible compliance requirements that may accompany new privacy standards.
Whether or not SB 354 becomes law, the direction of regulatory change indicates increasing scrutiny on how insurance data is handled — especially when third-party service providers are involved. Outsourcing providers like Staff Boom can play a key role in helping carriers adapt to higher standards of privacy and compliance.
In an evolving regulatory environment, aligning outsourcing strategy with privacy readiness not only enhances compliance but also builds customer trust and operational resilience.
Staff Boom helps insurance companies integrate compliant data handling into their back-office and customer-facing processes — making privacy readiness part of a competitive advantage.
