The amended bill is still opposed by insurers and must pass through several parliamentary processes if it is to be fully adopted by the legislature by the session's Aug. 31 close. But a number of observers said the bill, which failed passage last year and will die if it doesn't pass this term, stands a better chance of enactment.

They cite the amendments to the bill and newly won support for the measure from the California Credit Union League, Rancho Cucamonga as improving the odds for its passage. The support, according to Mark Lowe, a spokesman for CCUL, is due to a new opt-out provision for third-party companies involved in joint marketing agreements.

Opt-outs require the consumer to say they do not want personal nonpublic information shared while an opt-in assumes that information cannot be used unless a consumer is asked and provides permission.

The opt-out is important, according to Mr. Lowe, because it creates a level playing field for small institutions that may need to go to outside marketing sources rather than work among affiliates of a single, larger entity.

The bill's chances, according to Bruce Ferguson, vice president-state relations with the American Council of Life Insurers, Washington, will depend on how moderate Democrats view an amendment to the bill that now requires an opt-out for joint marketing agreements rather than an opt-in. The new support of business groups could also be a factor, he explained.

The ACLI and property-casualty trade groups including the Alliance of American Insurers, Downers Grove, Ill.; the American Insurance Association, Washington; and the National Association of Independent Insurers, Des Plaines, Ill., oppose the bill as it currently stands.

The Consumers Union San Francisco office could not be reached immediately for comment.

"California is a very volatile situation," said Sam Sorich, a senior vice president with the NAII.

There has even been talk of a citizen's initiative, or ballot proposition, to address the issue, said Rey Becker, vice president-property-casualty, with the Alliance. This is an option that he said would in all likelihood not be acceptable to the insurance industry.

The AIA still has "fundamental problems" with the bill, according to Nicole Mahrt, an AIA spokeswoman. As it stands, the bill makes it more difficult for an insurer to offer a customer a range of products such as homeowner or auto insurance, she said.

The ACLI's Mr. Ferguson detailed the reasons for ACLI's concerns. "It goes way beyond the parameters of GLB [Gramm-Leach-Bliley financial reform act]," he said.

The definition of affiliates is also problematic, he said, because whether or not a company is an affiliate depends on how it is organized. If it is considered an affiliate, an opt-out agreement is used, but if it considered a non-affiliate, an opt-in would be required.

Previously, financial institutions and affiliates were deemed to be a single entity, but now three requirements must be met to meet the definition of affiliate: engagement in the business of financial services; portfolio advisory services; and financial planning. Additionally, the units must be integrated to better offer services.

Another point of concern, he said, is a California-specific privacy notice that would have to be sent to consumers and differs from requirements in GLB and the Privacy of Consumer Financial and Health Information model regulation of the National Association of Insurance Commissioners, Kansas City, Mo.

Even as the California legislature debates financial privacy, the California and Alaska insurance departments are in the midst of work on regulations to establish consumer financial privacy guidelines.

California is scheduled to finalize a financial privacy regulation later this year. Insurance trade groups have also expressed concern over the outcome of this regulation as well as a proposed regulation that was recently released by the Alaska insurance department.

For instance, the NAII's Mr. Sorich said that the proposed California regulation still applies privacy guidelines to commercial insurance, a stance he maintained is inconsistent with both GLB and the NAIC privacy model.

The Alliance's Mr. Becker said that Alaska's proposed regulation could be "quite onerous" because of an opt-in provision for affiliates.

The regulation has been under consideration for about a year, said Mike Harrold, manager of the Northwest regional NAII office in Seattle. A hearing is scheduled for Sept. 5, he said. One thing that it does not include, he said, is a separate notice provision.

However, there is a concern that notes regarding privacy would have to be maintained indefinitely, he adds.

And, even as state legislatures and regulators continue to look at financial privacy, regulators at the NAIC are discussing an amendment that insurers are concerned could reopen the NAIC privacy model, an NAIC model that is already in place in 37 jurisdictions.

The amendment includes a change regarding privacy notices to group policyholders that would direct insurers to provide initial, annual and revised notices to the plan sponsor, group or blanket insurance policyholder, group annuity contract holder, or workers' compensation policyholder.

Insurance trade groups are objecting to the amendment on a number of grounds prior to its discussion at the fall NAIC meeting next month.

Among the points of contention are questions being raised over the amendment that range from the inclusion of commercial lines and workers' compensation under the regulation's purview- to a concern that operational uniformity will be lost if the insurance industry has to go back to state legislatures with changes.