VERMONT’S PRIVACY RULE UPHELD

A Superior Court judge has upheld Vermont regulations governing the use of private information by insurance companies chartered to do business in the state. The regulations prohibit insurance companies from selling or sharing personal customer information unless a customer approves. Vermont has applied similar rules to banks and other financial service businesses for more than 10 years, Attorney General William Sorrell said. Sorrell called Vermont’s regulations a “more protective standard” than federal rules, which allow insurance companies to sell or share private information only unless a customer objects. This so-called “opt out” standard also applies to banks and other businesses in the financial services sector. The regulations governing insurance companies were issued by the state Department of Banking, Insurance, Securities and Health Care Administration (BISHCA) in late 2001. In early 2002, five insurance trade groups sued BISHCA and then-Commissioner Elizabeth Costle, arguing that the state’s privacy regulations violated their constitutional right to free speech and that Costle did not have the authority to impose the rules under Vermont law. But in his ruling last month, Washington Superior Court Judge Alan Cook rejected these arguments. Cook said that BISHCA did have the authority to impose Vermont’s privacy regulations, and that the federal “opt-out” standard made it difficult for consumers to decide how their private information should be used.