(1) On and after January 1, 2003, a licensee shall not disclose nonpublic personal health information about a consumer or customer unless an authorization is obtained from the consumer or customer whose nonpublic personal health information is sought to be disclosed.

(2) Nothing in this section shall prohibit, restrict, or require an authorization for the disclosure of nonpublic personal health information by a licensee for the performance of the following insurance functions by or on behalf of the licensee: (a) Claims administration; (b) claims adjustment and management; (c) detection, investigation, or reporting of actual or potential fraud, misrepresentation, or criminal activity; (d) underwriting; (e) policy placement or issuance; (f) loss control; (g) ratemaking and guaranty fund functions; (h) reinsurance and excess loss insurance; (i) risk management; (j) case management; (k) disease management; (l) quality assurance; (m) quality improvement; (n) performance evaluation; (o) provider credentialing verification; (p) utilization review; (q) peer review activities; (r) actuarial, scientific, medical, or public policy research; (s) grievance procedures; (t) internal administration of compliance, managerial, and information systems; (u) policyholder service functions; (v) auditing; (w) reporting; (x) database security; (y) administration of consumer disputes and inquiries; (z) external accreditation standards; (aa) the replacement of a group benefit plan or workers’ compensation policy or program; (bb) activities in connection with a sale, merger, transfer, or exchange of all or part of a business or operating unit; (cc) any activity that permits disclosure without authorization pursuant to the federal Health Insurance Portability and Accountability Act privacy rules promulgated by the United States Department of Health and Human Services; (dd) disclosure that is required, or is one of the lawful or appropriate methods, to enforce the licensee’s rights or the rights of other persons engaged in carrying out a transaction or providing a product or service that a consumer requests or authorizes; (ee) any activity otherwise permitted by law, required pursuant to governmental reporting authority, or to comply with legal process; and (ff) additional insurance functions as may be approved by adoption and promulgation of rules and regulations of the director to the extent they are necessary for appropriate performance of insurance functions and are fair and reasonable to the interest of consumers.