2019 - 2020 LEGISLATURE
January 29, 2020 - Introduced by Representatives Petersen, Neylon and Duchow,
cosponsored by Senators Testin, Feyen and Olsen. Referred to Committee on
Science and Technology.
1An Act to create
601.465 (3) (f), subchapter IX (title) of chapter 601 [precedes 2
601.95], 601.95, 601.951, 601.952, 601.953, 601.954, 601.955 and 601.956 of the 3
statutes; relating to: imposing requirements related to insurance data
4cybersecurity and granting rule-making authority.
Analysis by the Legislative Reference Bureau
This bill imposes requirements relating to the protection of nonpublic
information on insurers and other persons regulated by the Office of the
Commissioner of Insurance (licensees). The bill defines “nonpublic information” to
mean nonpublic electronic information in the possession, custody, or control of a
licensee that is either information concerning a Wisconsin resident that can be used
to identify the individual in combination with another data element, such as a Social
Security number, or certain health-related information that can be used to identify
a Wisconsin resident.
Under the bill, a licensee must conduct a risk assessment and develop an
information security program based on the assessment. The risk assessment must
identify and assess reasonably foreseeable threats that could result in unauthorized
access to or transmission, disclosure, misuse, alteration, or destruction of nonpublic
information. The information security program must contain safeguards for the
protection of the licensee's information systems and nonpublic information and be
designed to mitigate threats, commensurate with the size and complexity of the
licensee, the nature and scope of the licensee's activities, and the sensitivity of the
nonpublic information. The bill requires the licensee to take specified risk mitigation
actions and to monitor, evaluate, and adjust the information security program as
The bill also requires that a licensee develop an incident response plan to
promptly respond to, and recover from, a cybersecurity event that compromises the
confidentiality, integrity, or availability of nonpublic information, the licensee's
information systems, or the continuing functionality of the licensee's business or
operations. Under the bill, “cybersecurity event” generally means an event resulting
in the unauthorized access to, or disruption or misuse of, an information system or
nonpublic information stored on an information system.
The bill further requires that a licensee exercise due diligence in selecting
third-party service providers and make reasonable efforts to require that a service
provider implement measures to protect and secure information systems and
nonpublic information and report the occurrence of any cybersecurity event.
Under the bill, the above requirements do not apply to a licensee who has less
than $10 million in year-end total assets, less than $5 million in gross annual
revenue, or fewer than 25 full-time employees. However, the commissioner may
issue an order to require compliance by an otherwise exempt licensee if warranted
by the licensee's circumstances. A licensee who is not exempt from the requirements
must annually certify to the commissioner that the licensee has complied with them.
Additionally, if a licensee knows that a cybersecurity event has or may have
occurred, the bill requires that the licensee conduct a prompt investigation to assess
the nature and scope of the event and take related actions, including the performance
of reasonable measures to restore the security of affected information systems. If the
cybersecurity event involves an information system maintained by a third-party
service provider, the licensee must comply with the investigation requirements or
make reasonable efforts to confirm that the service provider has either complied with
the requirements or failed to cooperate with the investigation.
Under the bill, a licensee must notify the commissioner of a cybersecurity event
if either of the following conditions is met:
1. The licensee is domiciled in Wisconsin and the cybersecurity event has a
reasonable likelihood of materially harming a Wisconsin resident or a material part
of the licensee's normal operations.
2. The licensee reasonably believes that the cybersecurity event involves the
nonpublic information of at least 250 Wisconsin residents, and the cybersecurity
event either must be reported to a government entity under federal or state law or
has a reasonable likelihood of materially harming a Wisconsin resident or a material
part of the licensee's normal operations.
The notification must provide specified information about the cybersecurity
event, including details about the event and its discovery, a description of the
accessed nonpublic information, the number of affected Wisconsin residents, and the
licensee's efforts to address the circumstances that allowed the event to occur. The
licensee is required to update the commissioner on material changes to the
information and as additional information becomes available. If the cybersecurity
event involves a third-party service provider, the licensee must notify the
commissioner of the event unless the service provider does so.
Under the bill, the commissioner has the power to examine and investigate the
affairs of a licensee to determine whether a violation of any of the above requirements
has occurred. A licensee must generally keep records relating to the requirements
for at least five years and produce them upon demand of the commissioner. Any
documents, materials, and other information from a licensee that are in the
possession or control of the commissioner are confidential and privileged.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
601.465 (3) (f) of the statutes is created to read:
(f) All information protected under s. 601.955, which is subject only 3
to the confidentiality provisions in s. 601.955.
Subchapter IX (title) of chapter 601 [precedes 601.95] of the 5
statutes is created to read:
Insurance data security
601.95 of the statutes is created to read:
In this subchapter:
“Authorized individual” means an individual who is known to and screened 12
by a licensee and whose access to the licensee's information system or nonpublic 13
information is determined by the licensee to be necessary and appropriate.
“Consumer” means an individual who is a resident of this state and whose 15
nonpublic information is in the possession, custody, or control of a licensee.
“Cybersecurity event” means an event resulting in the unauthorized access 17
to, or disruption or misuse of, an information system or the nonpublic information
stored on an information system, except that a “cybersecurity event” does not include 2
any of the following:
(a) The unauthorized acquisition of encrypted nonpublic information if the 4
encryption process or key is not also acquired, released, or used without 5
(b) The unauthorized acquisition of nonpublic information if the licensee 7
determines that the nonpublic information has not been used or released and has 8
been returned to the licensee or destroyed.
“Encrypted” means the transformation of data into a form that results in 10
a low probability of assigning meaning without the use of a protective process or key.
“Information security program” means the administrative, technical, and 12
physical safeguards that a licensee uses to access, collect, distribute, process, protect, 13
store, use, transmit, dispose of, or otherwise handle nonpublic information.
“Information system” means a discrete set of electronic information 15
resources organized for the collection, processing, maintenance, use, sharing, 16
dissemination, or disposition of nonpublic information, as well as any specialized 17
system, including an industrial or process controls system, telephone switching and 18
private branch exchange system, and environmental control system.
“Licensee” means a person licensed, authorized, or registered, or a person 20
required to be licensed, authorized, or registered, under chs. 600 to 655, other than 21
a purchasing or risk retention group that is chartered and licensed in another state 22
or a person acting as an assuming insurer that is domiciled in another state or 23
“Multifactor authentication” means authentication through verification of 25
at least 2 of the following types of authentication factors:
(a) Knowledge factor, including a password.
(b) Possession factor, including a token or text message on a mobile phone.
(c) Inherence factor, including a biometric characteristic.
“Nonpublic information” means electronic information in the possession, 5
custody, or control of a licensee that is not publicly available information and is any 6
of the following:
(a) Information concerning a consumer that can be used to identify the 8
consumer, in combination with at least one of the following data elements:
1. Social security number.
2. Driver's license number or nondriver identification card number.
3. Financial account number or credit or debit card number.
4. Security code, access code, or password that permits access to a financial 13
5. Biometric records.
(b) Information or data, other than information or data regarding age or 16
gender, in any form or medium created by or derived from a health care provider or 17
a consumer that can be used to identify the consumer and that relates to any of the 18