NU Online News Service, May 15, 5:54 p.m. – Insurance regulators in California and Connecticut say they are making progress with efforts to develop new insurance privacy regulations, while Vermont regulators continue to defend their privacy regulation in court.

State insurance departments throughout the country have been writing privacy regulations to comply with the federal Gramm-Leach-Bliley Financial Services Modernization Act of 1999.

California: The California Insurance Department says it hopes to release a new draft of its privacy regulations May 24. The draft would get a 15-day public comment period.

California held a hearing on the first draft of its privacy regulations in February. Officials are developing the new draft based on comments they received during the hearing.

Connecticut: Gov. John Rowland, a Republican, has signed S.B. 352, enacting a new financial services privacy law that gives Insurance Commissioner Susan Cogswell the authority to write Gramm-Leach-Bliley privacy regulations for Connecticut.

The General Assembly Legislative Review Committee will probably review the Connecticut Insurance Department’s proposed regulation May 28, according to Leslie Wolfgang, the department’s counsel.

The department tried to adopt a Gramm-Leach-Bliley privacy regulation in 2001, but the review committee decided the commissioner lacked the authority to implement the regulation.

The latest version resembles a model developed by the National Association of Insurance Commissioners, Kansas City, Mo. The Connecticut regulation would cover privacy of financial information, but it would not include privacy of health information.

The American Insurance Association, Washington, says it supports the proposed Connecticut regulation because the regulation would help create uniform privacy regulations.

Vermont: AIA and other insurance trade groups are suing the Vermont Department of Banking, Insurance, Securities and Health Care Administration, over a privacy regulation that includes strict health information privacy provisions.

The plaintiffs have accused the Vermont department of exceeding its authority by going beyond the Gramm-Leach-Bliley requirements.

The parties are now conducting pre-trial depositions and interrogatories, AIA spokesman Michael Moran says.