Vermont Department Responds To Privacy Suit

By Jim Connolly

February 28, 2002 at 07:00 PM

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NU Online News Service, Feb. 28, 10:10 p.m. – The Vermont Department of Banking, Insurance, Securities and Health Care Administration says it does have the statutory authority to impose an "opt in" requirement on insurers that want to share customers' personal financial information with other companies.

The department made that argument in a response filed Feb. 20 in a state court in Washington County, Vt.

The department was reacting to a lawsuit filed by insurance trade groups over a privacy regulation that was set to take effect Feb. 15.

An opt-in section in the regulation, which was promulgated to implement the Gramm-Leach-Bliley Financial Services Modernization Act of 1999, would require insurers to get consumers to make an active decision to allow sharing of personal financial information.

The trade groups want Vermont to use an "opt out" rule, which would require insurers only to allow consumers to take action to prevent sharing of personal information. The groups say imposing an opt-in requirement exceeds the department's statutory authority and hurts efforts to make states' insurance regulations more uniform.

The Vermont department says its regulation would not require licensees in Vermont to alter their forms, procedures and policies in a way that would be inconsistent with uniformity in other states.

The trade groups that brought the suit include the American Council of Life Insurers and the American Insurance Association, both of Washington; the National Association of Mutual Insurance Companies, Indianapolis; the Alliance of American Insurers, Downers Grove, Ill.; and the National Association of Independent Insurers, Des Plaines, Ill.

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