Insurers File Vermont Privacy Rule Suit

NU Online News Service, Jan. 31, 1:32 p.m.EST?Industry groups including the American Council of LifeInsurers, based in Washington, and four property-casualty insurerassociations groups have filed suit in state court contesting apending Vermont regulation to protect consumer privacy.

The rule being challenged was put in place by the Vermontdepartment of banking, insurance, securities & health careadministration.

Property-casualty insurer groups that are party to the suitinclude the Alliance of American Insurers, Downers Grove, Ill.; theAmerican Insurance Association, Washington; the NationalAssociation of Independent Insurers, Des Plaines, Ill.; and theNational Association of Mutual Insurance Companies,Indianapolis.

Filed in Washington County Superior Court, the suit challenges arule that would require insurers to obtain a customer's consentbefore they disseminated company information about theindividual.

The "opt-in" regulation, scheduled to become effective on Feb.15, would apply to non-affiliates sharing nonpublic personalinformation.

Vermont's opt-in regulation differs from opt-out agreementsadopted by other states, which require a consumer to specify thatprivate nonpublic information cannot be shared.

The suit contends that the department lacks the statutoryauthority to issue the regulation and separation of executive andlegislative powers were breached. A declaratory judgement is beingsought as well as an order to prevent the department from enforcingthe regulation.

The department has argued that it has the authority to enforcethe regulation and is seeking to establish standards similar torequirements for banks.