Other life insurance, property & casualty and health insurance entities have expressed interest in joining the suit, although no definite commitments have been made, Ms. Femia added.

She said the suit will address the legal authority of Elizabeth Costle, commissioner of the Vermont department of banking, insurance, securities and health care administration, to put existing regulations in place.

In particular, Ms. Femia said that the suit will challenge the opt-in provisions for non-affiliates sharing consumer information, contending that there should be an opt-out provision.

An opt-in provision requires insurers to get policyholders' permission to share information. An opt-out provision, on the other hand, would require a party whose information is being shared to specifically request that such information not be shared.

The suit will also contend that Vermont's privacy regulation goes beyond what is required in the Gramm-Leach-Bliley Financial Modernization Act of 1999.

The opt-in provision is currently required for non-affiliates sharing information such as credit worthiness and personal characteristics.

The department has said that in making its privacy regulations it is trying to establish standards similar to those the state requires for banks.

Affiliates would be required to operate according to the federal Fair Credit Reporting Act, which says affiliates can share some data such as name and contact information. However, for information such as credit-worthiness and personal characteristics, an opt-in would be required. Other states have an opt-out provision.

Depending on the backlog on the court's dockets, the case could take a year to move through the judicial process, Ms. Femia said.

Ms. Femia said that the decision to file a suit could be taken in other states. She said, because of its size and importance, California will be watched particularly closely by the ACLI as it establishes privacy guidelines.

The decision to sue is based entirely on the ACLI's understanding of Vermont laws and not on any personal disagreement with regulators, Ms. Femia noted.

In fact, the ACLI is now in contact with the department to seek guidance on how to meet the requirements of the regulation, Jack Dolan, an ACLI spokesman said.