2021 - 2022 LEGISLATURE
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2021 ASSEMBLY BILL 147
March 5, 2021 - Introduced by Representatives PETERSEN, RAMTHUN, BROOKS,
STEFFEN, DITTRICH, TUSLER, DOYLE, SPIROS, MURPHY, PETRYK, KNODL, ROZAR,
VORPAGEL, ARMSTRONG, KUGLITSCH, TRANEL, SNYDER and MOSES, cosponsored
by Senators TESTIN, RINGHAND, FEYEN and MARKLEIN. Referred to Committee
on Science, Technology and Broadband.
1 AN 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
4 cybersecurity 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
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ASSEMBLY BILL 147
actions and to monitor, evaluate, and adjust the information security program as
appropriate.
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.
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ASSEMBLY BILL 147
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:
1 SECTION 1. 601.465 (3) (f) of the statutes is created to read:
2 601.465 (3) (f) All information protected under s. 601.955, which is subject only
3 to the confidentiality provisions in s. 601.955.
4 SECTION 2. Subchapter IX (title) of chapter 601 [precedes 601.95] of the
5 statutes is created to read:
6 CHAPTER 601
7 SUBCHAPTER IX
8 INSURANCE DATA SECURITY
9 SECTION 3. 601.95 of the statutes is created to read:
10 601.95 Definitions. In this subchapter:
11 (1) “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.
14 (2) “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.
16 (3) “Cybersecurity event” means an event resulting in the unauthorized access
17 to, or disruption or misuse of, an information system or the nonpublic information
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1 stored on an information system, except that a “cybersecurity event” does not include
2 any of the following:
3 (a) The unauthorized acquisition of encrypted nonpublic information if the
4 encryption process or key is not also acquired, released, or used without
5 authorization.
6 (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.
9 (4) “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.
11 (5) “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.
14 (6) “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.
19 (7) “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 jurisdiction.
24 (8) “Multifactor authentication” means authentication through verification of
25 at least 2 of the following types of authentication factors:
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ASSEMBLY BILL 147 SECTION 3
1 (a) Knowledge factor, including a password.
2 (b) Possession factor, including a token or text message on a mobile phone.
3 (c) Inherence factor, including a biometric characteristic.
4 (9) “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:
7 (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:
9 1. Social security number.
10 2. Driver's license number or nondriver identification card number.
11 3. Financial account number or credit or debit card number.
12 4. Security code, access code, or password that permits access to a financial
13 account.
14 5. Biometric records.
15 (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 following:
19 1. The physical, mental, or behavioral health or condition of the consumer or
20 a member of the consumer's family.
21 2. The provision of health care to the consumer.
22 3. Payment for the provision of health care to the consumer.
23 (10) “Publicly available information” means information that a licensee has a
24 reasonable basis to believe is lawfully made available to the general public from
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1 federal, state, or local government records, widely distributed media, or disclosures
2 required by federal, state, or local law.
3 (11) “Third-party service provider” means a person other than a licensee who
4 contracts with a licensee to maintain, process, or store nonpublic information or is
5 otherwise permitted access to nonpublic information through its provision of
6 services to the licensee.
7 SECTION 4. 601.951 of the statutes is created to read:
8 601.951 General provisions. (1) EXCLUSIVE STATE STANDARDS. This
9 subchapter establishes the exclusive state standards applicable to licensees for data
10 security, the investigation of a cybersecurity event, and notification of a
11 cybersecurity event to the commissioner.
12 (2) EXCEPTIONS TO APPLICABILITY. (a) This subchapter does not apply to a person
13 who is an employee, agent, representative, or designee of a licensee and who is also
14 a licensee to the extent that the person is covered by the information security
15 program of the other licensee and the other licensee has complied with this
16 subchapter on behalf of the person.
17 (b) A licensee affiliated with a depository institution that maintains an
18 information security program in compliance with the interagency guidelines
19 establishing information security standards as set forth pursuant to 15 USC 6801
20 and 6805 shall be considered to meet the requirements of this subchapter, provided
21 that the licensee produces, upon request of the commissioner, documentation
22 satisfactory to the commissioner that independently validates the adoption by the
23 affiliated depository institution of an information security program that satisfies the
24 interagency guidelines.
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1 (c) This subchapter, except for s. 601.954 (1), does not apply to a licensee who
2 is subject to and governed by 45 CFR Parts 160 and 164 and who maintains nonpublic
3 information in the same manner as protected health information under 45 CFR
4 Parts 160 and 164.
5 (d) If a licensee ceases to qualify for an exception under par. (a) to (c), the
6 licensee shall have 180 days to comply with this subchapter.
7 (3) AGREEMENTS BETWEEN PARTIES. Nothing in this subchapter shall prevent or
8 abrogate an agreement between a licensee and another licensee, a 3rd-party service
9 provider, or another party to fulfill any of the requirements under s. 601.953 or
10 601.954.
11 (4) PRIVATE CAUSE OF ACTION. This subchapter may not be construed to create
12 or imply a private cause of action for violation of its provisions or to curtail a private
13 cause of action that otherwise exists in the absence of this subchapter.
14 (5) RULES. The commissioner may promulgate rules that are necessary to carry
15 out the provisions of this subchapter.
16 SECTION 5. 601.952 of the statutes is created to read:
17 601.952 Information security program. (1) IMPLEMENTATION OF PROGRAM.
18 No later than one year after the effective date of this subsection .... [LRB inserts
19 date], a licensee shall develop, implement, and maintain a comprehensive written
20 information security program based on the licensee's risk assessment under sub. (2)
21 and consistent with the conditions of sub. (3) (a). The program shall contain
22 administrative, technical, and physical safeguards for the protection of the licensee's
23 information systems and nonpublic information. The licensee shall design the
24 program to do all of the following:
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1 (a) Protect against threats and hazards to the security and integrity of the
2 information systems and nonpublic information.
3 (b) Protect against unauthorized access to and use of nonpublic information
4 and minimize the likelihood of harm to a consumer from the unauthorized access or
5 use.
6 (c) Establish and periodically reevaluate a schedule for retention and disposal
7 of nonpublic information and establish a mechanism for the destruction of nonpublic
8 information that is no longer needed.
9 (2) RISK ASSESSMENT. The licensee shall conduct a risk assessment under which
10 the licensee shall do all of the following:
11 (a) Identify reasonably foreseeable internal and external threats that could
12 result in unauthorized access to or transmission, disclosure, misuse, alteration, or
13 destruction of nonpublic information, including nonpublic information that is
14 accessible to or held by 3rd-party service providers of the licensee.
15 (b) Assess the likelihood and potential damage of the threats identified under
16 par. (a), taking into consideration the sensitivity of the nonpublic information.
17 (c) Assess the sufficiency of policies, procedures, information systems, and
18 other safeguards to manage the threats identified under par. (a) in each relevant
19 area of the licensee's operations, including all of the following:
20 1. Employee training and management.
21 2. Information systems, including the classification, governance, processing,
22 storage, transmission, and disposal of information.
23 3. Processes for detecting, preventing, and responding to attacks, intrusions,