IF YOU HAVE ANY kind of personal insurance, or have ever applied for coverage, some insurance company has a file on you. Overall, the insurance industry has billions of bits of sensitive information about the lives, health, property and habits (especially driving habits) of most Americans. Most of this data is collected for sound business reasons and handled carefully. However, most insurance applicants and policy-holders, lacking access to the companies' files, have no easy way to combat -- or even to find out about -- occasional clerical errors, invasions of their privacy or insurance judgments based on inaccurate or irrelevant information. The customers' vulnerability -- as well as the nature and sheer bulk of the material involved -- has made the industry's information practices a subject of continuing concern.

Now Aetna Life & Casualty, the nation's largest investor-owned insurance company, has voluntarily opened up many of its records and operations to customers' scrutiny. Under the company's new code, applicants will be told what personal information Aetna needs and how it will be obtained. If an application is denied, the consumer will be told why. By calling a toll-free number, any Aetna policy-holder may find out the nature and substance of all underwriting information about him in the company's files -- except medical information, which will be given on request to his physician. If a customer challenges anything in the records, Aetna promises to review the matter, correct errors and include the individual's own version of anything in dispute. Finally, Aetna now discloses with whom its records may be shared in the course of business and promises not to disclose information more widely without permission.

These rules closely resemble those already applied to federal files, imposed on credit-reporting agencies and urged on the insurance industry by the Privacy Protection Study Commission last year. That's no coincidence; Aetna's president, William O. Bailey, served on that commission and persuaded it to emphasize private initiatives instead of public regulation of corporate practices. Having taken that stand, Mr. Bailey now wants to demonstrate that it is sound. Fair record-keeping practices are also a good business investment, in his view, because "the minor difficulties" involved in changing some procedures "are a small price to pay for greater public confidence in our company and our industry." We think that's right. If the rest of the industry follows Aetna's lead, consumers will have far more assurance of fair and respectful treatment -- and the quarrels and burdens of regulation can be minimized.