United States: State Data Breach Notification Requirements Specifically Applicable To Insurers

Last Updated: September 29 2015
Article by Patrick H. Haggerty

Almost all U.S. states and territories have enacted breach notification laws requiring private and/or government entities to notify individuals when their personal information is compromised. These laws vary, and much has been written about the challenges caused by the differences, including who must comply with the law (e.g., persons, businesses, information brokers, government entities, covered entities); definitions of "personal information" (e.g., first name or first initial and last name combined with a Social Security number, driver's license or state ID, financial account numbers, or health information); what constitutes a breach (e.g., unauthorized acquisition of data or access to data, risk of harm); requirements for notice (e.g., timing or method of notice and who must be notified); whether notification of a state regulator (e.g., attorney general's office) is required; and exemptions (e.g., for encrypted information). We have created a chart describing each law as well as a chart summarizing key issues. Separate and apart from these laws, eight states—California, Connecticut, Maine, New Hampshire, Ohio, Rhode Island, Vermont, Washington, and Wisconsin—have breach notification requirements that specifically apply to insurers. These breach notification requirements also vary and are discussed in detail below.

California. Under California Civil Code § 1798.82, any entity conducting business in California that owns or licenses computer data that includes personal information must disclose any data security breach to California residents whose unencrypted personal information "was, or is reasonably believed to have been, acquired by an unauthorized person." Under that same statute, any entity required to notify more than 500 California residents must also notify the attorney general of the state of California. On May 16, 2014, and later updated on February 5, 2015, the California Insurance Department issued a notice requesting all insurers, insurance producers, and insurance support organizations to provide the insurance commissioner any notices or information submitted to the attorney general's office.[1] Copies of notices must be sent to the California Department of Insurance, Attention Susan Bernard, Division Chief, Field Examinations, 45 Fremont Street, 24th Floor, San Francisco, California 94105; e-mail: Susan.Bernard@insurance.ca.gov.

Connecticut. On August 10, 2010, the Connecticut Insurance Department issued Bulletin IC-25 to all licensees and registrants of the department, including insurance producers, public adjusters, bail bond agents, appraisers, certified insurance consultants, casualty claim adjusters, property and casualty insurers, life and health insurers, healthcare centers, fraternal benefit societies, captive insurers, utilization review companies, risk retention groups, surplus line companies, life settlement companies, preferred provider networks, pharmacy benefit managers, and medical discount plans.[2] Bulletin IC-25 requires all registrants and licenses to notify the department of any information security incident which affects any Connecticut residents. "Information security incident" is broadly defined as "any unauthorized acquisition or transfer of, or access to, personal health, financial, or personal information, whether or not encrypted, of a Connecticut insured, member, subscriber, policyholder, or provider, in whatever form the information is collected, used or stored, which is obtained or maintained by a licensee or registrant of the Insurance Department, the loss of which could compromise or put at risk the personal, financial, or physical well-being of the affected insureds, members, subscribers, policyholders or providers." The requirement to notify the department when information is encrypted is contrary to most existing breach notification laws, including Connecticut's own breach notification law.

Notification of any information security incident which affects Connecticut residents must be reported in writing via first-class mail, overnight delivery service, or electronic mail to the commissioner "as soon as the incident is identified, but not later than five calendar days after the incident is identified." The notification should include as much of the following as is known:

  • Date of the incident
  • Description of the incident (how information was lost, stolen, breached)
  • How discovered
  • Whether lost, stolen, or breached information has been recovered, and if so, how
  • Whether individuals involved in the incident (both internal and external) have been identified
  • Whether a police report has been filed
  • Type of information lost, stolen, or breached (equipment, paper, electronic, claims, applications, underwriting forms, medical records, etc.)
  • Whether information was encrypted
  • Period of time covered by lost, stolen, or breached information
  • How many Connecticut residents were affected
  • Results of any internal review identifying either a lapse in internal procedures or confirmation that all procedures were followed
  • Identification of remedial efforts being undertaken to cure the situation which permitted the information security incident to occur
  • Copies of the licensee/registrants' privacy policies and data breach policy
  • Regulated entity's contact person for the department to contact regarding the incident (someone both familiar with the details and able to authorize actions for the licensee or registrant)
  • Other regulatory or law enforcement agencies notified (who, when)

The bulletin states that the department will want to review, in draft form, any communications proposed to be sent to affected individuals advising of them of the incident, as well as to discuss the level of credit monitoring and insurance protection which the department will require to be offered to affected consumers and for what period of time.

Finally, the bulletin provides that if the information security incident occurs at or by a vendor or business associate of a licensee or registrant, the licensee or registrant must report the incident to the department. The bulletin also states that the department will want to be kept informed of how the licensee or registrant is managing the vendor's activities and what protections and remedies are being put in place by the vendor for Connecticut consumers.

Maine. In response to the enactment of Maine's Notice of Risk to Personal Data Act (Data Act), 10 M.R.S.A. §§ 1346-1349, the Maine Bureau of Insurance issued Bulletin 345 to clarify the responsibilities under the Data Act of persons or entities regulated by the superintendent.[3] The bulletin provides that the Data Act applies to information brokers as well as to persons and entities licensed or regulated by the superintendent—insurers, producers, adjusters, and third-party administrators, for example. In addition, the bulletin provides that that those licensed by the superintendent are required to notify the superintendent of breaches that require notice under the Data Act. The notice to the superintendent should include a description of the breach; the number of Maine residents affected, if known; a copy of the notice and other information sent to affected persons; a description of other curative steps taken; and the name and contact information for the person whom the superintendent may contact about the breach.

New Hampshire. While the New Hampshire Insurance Department has not issued a bulletin on the state's breach notification law, that law requires any person engaged in trade or commerce in the state to notify the primary regulator of a security breach.[4] Thus, any entity regulated by the department is required to notify the department of any security breach. The notice must provide the anticipated date of notice to the affected individuals and the approximate number of New Hampshire residents who will be notified.

Ohio. Under an Ohio Department of Insurance (ODI) bulletin that became effective November 2, 2009, all persons or entities holding a license or certificate of authority from the superintendent of insurance are required to notify ODI within 15 calendar days of discovering a "loss of control" of policyholder's personal information.[5] The notification to ODI is required for incidents affecting more than 250 Ohio residents. Loss of control is defined as "the unauthorized access to, unauthorized acquisition of, or disappearance of any Personal Information, including with respect to computerized data the unauthorized access to and/or acquisition of that computerized data that compromises the security or confidentiality of Personal Information." The definition of personal information is the common definition used in most state data breach laws—the individual's first name or first initial and last name in combination with a Social Security number, driver's license number or state identification number, or bank/credit/debit card or account number.

Rhode Island. Pursuant to Rhode Island Insurance Regulation 107, licensees of the Rhode Island Department of Business Regulation, which includes insurance companies and producers, must notify the department of a breach of the security of computerized unencrypted data that poses a significant risk of identity theft.[6] The disclosure to the department is required to be made in the most expedient time possible and without unreasonable delay consistent with the disclosure required in state's data breach notification law—R.I.G.L. § 11-49.2-3.

Vermont. On December 21, 2007, the Vermont Department of Banking, Insurance, Securities and Health Care Administration issued Bulletin 1, providing security breach notification guidance based on the Vermont Security Breach Notification Act—9 V.S.A. §§ 2430-2435.[7] Subsequently, on August 6, 2013, the Vermont Department of Financial Regulation issued Bulletin Number 3, which summarizes the amendments to the notice requirements in the Vermont Security Breach Notification Act, codified at 9 V.S.A. §§ 2435(b) and (f) and effective May 13, 2013.[8] The bulletins provide that the Vermont's breach notification law applies to insurance companies, captive insurance companies, debt adjusters, and any other public or private corporation, limited liability company, or business regulated by the department. The bulletins further provide that any entity regulated by the department must provide notice to the department within 14 days of discovering any electronic data security breach that compromises a consumer's nonpublic personally identifiable information.

Washington. As of June 1, 2013, all licensees, including insurers and producers, are required to notify the Washington Insurance Commissioner

about the number of customers or consumers potentially affected and what actions are being taken in writing within two business days after determining notification must be sent to consumers or customers in compliance with RCW 19.255.010 [Washington's breach notification law] and 45 C.F.R. 164 [HIPAA] pertaining to: (a) A breach of personal information as defined in RCW 19.255.010 (4) and (5) that seems reasonably likely to subject customers to a risk of criminal activity; or (b) A breach of unsecured protected health information as defined in 45 C.F.R. 164.402 which compromises the security or privacy of the protected information for licensees subject to 45 C.F.R. 164.[9]

The written notification should be provided to Mary Childers, Consumer Advocacy Program Manager, Washington State Office of the Insurance Commissioner, Insurance 5000 Building, P.O. Box 40256, Olympia, WA 98504-0256; e-mail: marych@oic.wa.gov.

Wisconsin. On December 4, 2006, the Wisconsin Office of the Commissioner of Insurance issued a bulletin to all Wisconsin-licensed insurers, gift annuities, warranty plans, motor clubs, and employee benefit plan administrators requesting that they "notify the Office of any unauthorized access to personal information of Wisconsin residents as soon as practicable but not later than 10 days after it becomes aware of such unauthorized access."[10] The office defines personal information as

an individual's last name and the individual's first name or first initial, in combination with and linked to any of the following elements, if the element is not publicly available information and is not encrypted, redacted, or altered in a manner that renders the element unreadable:

  1. The individual's Social Security number.
  2. The individual's driver's license number or state identification number.
  3. The number of the individual's financial account number, including a credit or debit card account number, or any security code, access code, or password that would permit access to the individual's financial account.
  4. The individual's deoxyribonucleic acid profile, as defined in s. 939.74 (2d) (a).
  5. The individual's unique biometric data, including fingerprint, voice print, retina or iris image, or any other unique physical representation.

The written notification must be provided to Ms. Jo LeDuc, Senior Insurance Examiner, Office of the Commissioner of Insurance, P.O. Box 787, Madison, WI 53707-787; e-mail: jo.leduc@wisconsin.gov.

Footnotes

[1] California Insurance Department Notice (May 16, 2014, and updated Feb. 5, 2015), available at http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/NoticeToInsurersDataBreachReq.pdf (last visited Sept. 16, 2015).

[2] Connecticut Insurance Department Bulletin IC-25, available at http://www.ct.gov/cid/lib/cid/Bulletin_IC_25_Data_Breach_Notification.pdf (last visited Sept. 16, 2015).

[3] Maine Bureau of Insurance Bulletin 345 (Nov. 6, 2006), available at http://www.maine.gov/pfr/insurance/bulletins/345.htm (last visited Sept. 16, 2015).

[4] N.H. Rev. Stat. § 359-C:20(I)(b).

[5] Ohio Department of Insurance Bulletin 2009-12 (Nov. 2, 2009), available at https://www.insurance.ohio.gov/Legal/Bulletins/Documents/2009-12.pdf (last visited Sept. 16, 2015).

[6] Rhode Island Department of Business Regulation, Insurance Regulation 107, available at http://www.dbr.state.ri.us/documents/rules/insurance/InsuranceRegulation107.pdf (last visited Sept. 16, 2015).

[7] Vermont Department of Banking, Insurance, Securities and Health Care Administration Bulletin No. 1 (Dec. 21, 2007), available at http://www.dfr.vermont.gov/sites/default/files/BISHCA-Bul-1.pdf (last visited Sept. 16, 2015).

[8] Vermont Department of Financial Regulation Bulletin No. 3, available at http://www.dfr.vermont.gov/reg-bul-ord/security-breach-notice-act-bulletin (last visited Sept. 16, 2015).

[9] Washington Administrative Code § 284-04-625(2), available at http://apps.leg.wa.gov/wac/default.aspx?cite=284-04-625 (last visited Sept. 16, 2015).

[10] Wisconsin Office of the Commissioner of Insurance Bulletin (Dec. 4, 2006), available at http://oci.wi.gov/bulletin/1206security.htm (last visited Sept. 16, 2015).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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