South Carolina Insurance Data Security Statutes

Type of Data Covered

Deadline for Notification

Government Notice

Electronic and non-electronic in some cases.

Most expedient time possible and without unreasonable delay.

Yes – Notify the Director of the Department of Insurance.

Subject Licensees

Applies to “licensees,” defined as persons or businesses licensed, authorized to operate, or registered, or required to be licensed, authorized, or registered pursuant to South Carolina insurance laws. This does not include a purchasing group or a risk retention group licensed in another state or a licensee that is acting as an assuming insurer that is domiciled in another state or jurisdiction.

Security Standard

Taking into consideration the size and complexity of the business, the nature and scope of the licensee’s activities, including its use of third-party service providers, and the sensitivity of the nonpublic information used or in the licensee’s possession, custody, or control, licensees must conduct a risk assessment.

Based on the risk assessment, licensees must develop, implement, and maintain a written comprehensive information security program that contains administrative, technical, and physical safeguards designed to:

• Protect the security and confidentiality of nonpublic information and the security of the information system;
• Protect against threats or hazards to the security or integrity of nonpublic information and the information system;
• Protect against unauthorized access to or use of nonpublic information, and minimize the likelihood of harm to a consumer; and
• Define and periodically reevaluate a schedule for retention of nonpublic information and a mechanism for its destruction when no longer needed.

Types of Data Covered

Electronic; Paper and other non-electronic data also covered when nonpublic information concerns medical or health information.

Definitions

“Consumer” means an individual including, but not limited to, an applicant, policyholder, insured, beneficiary, claimant, and certificate holder who is a resident of this State and whose nonpublic information is in a licensee's possession, custody, or control.

“Cybersecurity event” means an event resulting in unauthorized access to or the disruption or misuse of an information system or information stored on an information system. It does not include the unauthorized acquisition of encrypted nonpublic information if the encryption, process or key is not also acquired, released or used without authorization. It also does not include an event with regard to which the licensee has determined that the nonpublic information accessed by an unauthorized person has not been used or released and has been returned or destroyed.

“Nonpublic information” means electronic information not publicly available and:

• The licensee’s business-related information, the tampering of or unauthorized disclosure, access, or use of would cause material adverse impact to the licensee’s business, operations, or security;
• Any information concerning a consumer that because of name, number, personal mark, or other identification can be used to identify the consumer, in combination with any one or more of the following data elements:

• Social Security number;
• Driver’s license number or state identification card number;
• Financial account number, or credit or debit card number;
• Security code, access code, or password that would permit access to a resident’s financial account; or
• Biometric records.

• Any information (except age or gender) in any form or medium by or derived from a health care provider or consumer, that can be used to identify a consumer and relates to:

• The physical, mental, or behavioral health/condition of a consumer or his or her family;
• The provision of health care to any consumer; or
• Payment for health care to any consumer.

Methods of Compliance

Risk Assessment

A licensee is required to conduct a risk assessment, and as part of this process, it must:

• Designate one or more employees, affiliate, or outside vendor to be responsible for the comprehensive information security program;
• Identify reasonably foreseeable internal or external threats that could result in unauthorized access, transmission, disclosure, misuse, alteration, or destruction of nonpublic information, including the security of information
• systems and nonpublic information that are accessible to, or held by, third-party service providers;
• Assess the likelihood and potential damage of identified threats, considering the sensitivity of the nonpublic information;
• Assess sufficiency of policies, procedures, information systems, and other safeguards to manage threats, including consideration of threats in each relevant area of the licensee’s operations, including all of the following:

1. Employee training and management;
2. Information systems, including network and software design, as well as information classification, governance, processing, storage, transmission, and disposal;
3. detecting, preventing, and responding to attacks, intrusions, or other security system failures.

• Implement information safeguards to manage identified threats.

Information Security Program

Based on its risk assessment, the licensee is required to:

• Design its information security program to mitigate identified risks, commensurate with its size and complexity, the nature and scope of its activities, including its use of third-party service providers, and the sensitivity of the nonpublic information used by or in the licensee’s possession, custody, or control.
• Determine the appropriateness of and implement the following security measures:

• Placing access controls on information systems, including controls to authenticate and permit access only to authorized individuals to protect against the unauthorized acquisition;
• Identifying and managing the data, personnel, devices, systems, and facilities that enable the licensee to achieve its business purposes in accordance with their relative importance to business objectives and the licensee’s risk strategy;
• Restricting access at physical locations containing nonpublic information to authorized individuals;
• Protecting by encryption or other appropriate means all nonpublic information transmitted over external networks and stored on laptop computers, or on other portable computing or storage device or media;
• Adopting secure development practices for in-house developed applications and procedures for evaluating, assessing, or testing the security of externally developed applications;;
• Modifying the information system in accordance with the licensee's information security program;
• Using effective controls, including multifactor authentication for an individual accessing nonpublic information;
• Regularly testing and monitoring systems and procedures to detect actual and attempted attacks on, or intrusions into, information systems;
• Including audit trails within the information security program designed to detect and respond to cybersecurity events and designed to reconstruct material financial transactions sufficient to support normal operations and obligations of the licensee;
• Implementing measures to protect against destruction, loss, or damage of nonpublic information due to environmental hazards such as fire and water damage or other catastrophes or technological failures; and
• Developing, implementing, and maintaining procedures for the secure disposal of nonpublic information in any format;

• Include cybersecurity risks in the licensee's enterprise risk management process;
• Stay informed regarding emerging threats or vulnerabilities and use reasonable security measures when sharing information relative to the character of the sharing and the type of information shared;
• Provide its personnel with cybersecurity awareness training that is updated as necessary to reflect risks identified by the licensee in the risk assessment;
• Exercise due diligence in selecting its third-party service provider and require a third-party service provider to implement appropriate administrative, technical, and physical measures to protect and secure the information systems and nonpublic information that are accessible to, or held by, the third-party service provider;
• Monitor, evaluate and adjust the information security program consistent with any relevant changes in technology, the sensitivity of its nonpublic information, internal or external threats to information, and the licensee's own changing business arrangements including, but not limited to, mergers and acquisitions, alliances and joint ventures, outsourcing arrangements, and changes to information systems;
• Establish a written response plan designed to promptly respond to, and recover from, a cybersecurity event that compromises the confidentiality, integrity, or availability of nonpublic information in its possession, the licensee's information systems, or the continuing functionality of any aspect of the licensee's business or operations;
• If the licensee is an insurer domiciled in South Carolina, it must:

• Submit to the Director of the South Carolina Department of Insurance, a written statement by February 15 each year, certifying that the insurer is in compliance with the requirements established by this Act.
• Maintain for examination by the department all records, schedules, and data supporting this certificate for a period of five years. To the extent an insurer has identified areas, systems, or processes that require material improvement, updating or redesign, the insurer shall document the identification and the remedial efforts planned and underway to address such areas, systems, or processes. Such documentation must be available for inspection by the director.

Role of the Board of Directors & Executives

If the licensee has a broad of directors, the board or a committee of the board must require the licensee's executive management or its delegates to:

• Develop, implement, and maintain the licensee's information security program; and
• Report in writing at least annually the overall status of the security program and the licensee’s compliance and material matters related to the information security program addressing issues such as risk assessment, risk management and control decisions, third-party service provider arrangements, testing results, cybersecurity events or violations and management's responses, and recommendations for changes in the information security program.

If the executive management of a licensee delegates any of its responsibilities, it is responsible for overseeing the development, implementation, and maintenance of the licensee's information security program prepared by the delegates and ensuring that the report from the delegates  complies with the requirements of the report to the board of directors

Incident Response Plan

The incident response plan must include:

• The internal process for responding to a cybersecurity event;

• The goals of the incident response plan;

• The definition of clear roles, responsibilities, and levels of decision-making authority;

• External and internal communications and information sharing;

• Identification of requirements to remediate identified weaknesses in information systems and associated controls;

• Documentation and reporting regarding cybersecurity events and related incident response activities; and

• The evaluation and revision as necessary of the incident response plan following a cybersecurity event.

Government Notice

A subject licensee must notify the Director of the Department of Insurance no later than seventy-two (72) hours after determining that a cybersecurity event has occurred if either of the following criteria are met:

1. South Carolina is the licensee’s state of domicile in the case of an insurer, or the licensee’s home state in the case of a producer; or
2. The licensee reasonably believes that the nonpublic information involved is of no less than two hundred and fifty consumers residing in the State, and the cybersecurity event and:
   1. The cybersecurity event impacts the licensee, and as a result, the licensee is required to provide notice to any governmental body, self-regulatory agency, or any other supervisory body pursuant to state or federal law; or
   2. There is a reasonable likelihood of materially harming a consumer residing in this State or a material part of the normal operations of the licensee.

If notification to the Director is required, it should be in electronic form and include as much of the following information as possible:

1. Date of the cybersecurity event;
2. A description of how the information was exposed, lost, stolen, or breached, including the specific roles and responsibilities of third-party services providers, if any;
3. How the cybersecurity event was discovered;
4. Whether any lost, stolen, or breached information has been recovered and if so, how this was done;
5. The identify of the source of the cybersecurity event;
6. Whether the licensee has filed a police report or has notified any regulatory, governmental or law enforcement agencies and, if so, when such notification was provided;
7. A description of the specific types of information acquired without authorization, which means particular data elements including, for example, types of medical information, financial information, or that allows identification of the consumer;
8. The period during which the information system was compromised by the cybersecurity event;
9. The number of total consumers in South Carolina affected by the cybersecurity event, in which case the licensee shall provide the best estimate in the initial report to the director and update the estimate with each subsequent report to the director, as required by this section;
10. The results of any internal review identifying a lapse in either automated controls or internal procedures, or confirming that all automated controls or internal procedures were followed;
11. A description of efforts being undertaken to remediate the situation which permitted the cybersecurity event to occur;
12. A copy of the licensee’s privacy policy and a statement outlining the steps the licensee will take to investigate and notify consumers affected by the cybersecurity event; and
13. The name of a contact person who is both familiar with the cybersecurity event and authorized to act on behalf of the licensee.
14. A copy of the consumer notice.
15. The licensee has a continuing obligation to update and supplement initial and subsequent notifications to the director concerning the cybersecurity event.

Enforcement

The Director has the power and authority to examine and investigate into the affairs of a licensee to determine whether the licensee is engaged in conduct in violation of this Act. When The Director has reason to believe that a licensee is engaged in conduct in this State which violates the provisions of this chapter, the director may take necessary and appropriate action to enforce the provisions of this statute.