ARIZONA HOUSE OF REPRESENTATIVES Fifty-fifth Legislature Second Regular Session

---

HB 2690: cybersecurity risk; insurance

Sponsor: Representative Weninger, LD 17

Committee on Commerce

Overview

Directs the Arizona Department of Administration (ADOA) to obtain insurance for security system and data breaches. Establishes the Cyber Risk Insurance Fund (Fund).

History

ADOA is required to, the extent it is deemed necessary, provide insurance on the following:

1) All State-owned buildings;

2) Contents in any building owned, leased or rented to or by the state;

3) This state and its departments, agencies, boards and commissions and all officers of these entities as well as provide insurance for actions and omissions by these entities when acting in authorized governmental actions;

4) All personal property reported to ADOA that is under the clear responsibility of this state because of written leases or other written agreements;

5) This state and its departments, agencies, boards and commissions against casualty, use and occupancy and liability losses;

6) Workers' compensation and employers' liability insurance;

7) Design and construction of buildings, roads, environmental remediations and other construction projects; and

8) Other exposures to loss where insurance may be required to protect this state and its departments, agencies, boards and commissions and for all officers, agents and employees acting in the course and scope of employment or authorization (A.R.S. § 41-621).

ADOA may also determine that self-insurance is necessary or desirable and, if it is decided to be, ADOA will provide for the state self-insurance for losses arising out of state property, liability or workers' compensation claims. The Director of ADOA may impose on state departments, agencies, boards and commissions a deductible for each loss that arises out of a property, liability or workers' compensation loss (A.R.S. § 41-621). Each year ADOA is required to provide a report to the Legislature on actuarial needs due to liability losses, workers compensation liability losses and property losses by September 1 (A.R.S. § 41-622).

Provisions

1. Requires ADOA to obtain insurance, or self-insure, on losses caused by data breaches, security system breaches and security incidents for select boards, agencies and commissions. (Sec. 1)

2. Allows ADOA, if self-insured, to apply a deductible for losses due to actual or suspected data breaches, security system breaches or security incidents. (Sec. 1)

3. Establishes the Fund within ADOA. (Sec. 2)

4. Requires ADOA to include the actuarial needs for replenishment of the Fund in the agency's annual budget request. (Sec. 2)

5. Specifies interest on any judgment against the state paid out for the Fund accrues at the average yield offered by U.S. Treasury bills. (Sec. 2)

6. Specifies the Fund monies are exempt from lapsing of appropriation and are continuously appropriated. (Sec. 2)

7. Defines pertinent terms. (Sec. 1)

8. Makes technical and conforming changes. (Sec. 1, 2)

---------- DOCUMENT FOOTER ---------

                  HB 2690

Initials PRB           Page 0 Commerce

---------- DOCUMENT FOOTER ---------