Insurers File Vermont Privacy Rule Suit

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

The rule being challenged was put in place by the Vermont department of banking, insurance, securities & health care administration.

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

Filed in Washington County Superior Court, the suit challenges a rule that would require insurers to obtain a customer's consent before they disseminated company information about the individual.

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

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

The suit contends that the department lacks the statutory authority to issue the regulation and separation of executive and legislative powers were breached. A declaratory judgement is being sought as well as an order to prevent the department from enforcing the regulation.

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