Cyber Kickoff
Jan 4, 2017


New York State Department of Financial Services (DFS) Superintendent Maria T. Vullo announced that a proposed DFS cybersecurity regulation, the first of its kind in the nation, will become effective March 1, 2017. DFS held the enforcement of this regulation for two months, following some industry objection. The regulation was to be enforced beginning this week. DFS maintains that the March enforcement date allows regulated entities to review the rule and make certain that their systems can effectively meet the risks associated with cyber threats.




Once implemented, the regulation will require banks, insurance companies, and other financial services institutions regulated by the DFS to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of New York State's financial services industry. In the updated regulation, DFS eased the reporting requirements that define when "cybersecurity events" occur. While still requiring companies to notify the DFS Superintendent within 72 hours, the mandate narrowly applies to incidents where companies have reasonably concluded that the event compromised confidential information.



The regulation also requires the periodic risk assessment of cyber security programs, the encryption of non-public information, and the development of an incident response plan. Institutions must designate a chief information security officer to oversee all cybersecurity program operations and develop policies to ensure third party security providers are accountable for such programs.



In this final review period, DFS will focus on industry comments not previously raised. The updated proposed regulation, published December 28, 2016, will be finalized following a 30-day notice and public comment period this month. With this New York framework running alongside the NAIC model cybersecurity legislation, which is expected to take the field this spring, intensive cyber regulation is on its way in 2017.


Strong Safety Positions


The Tennessee Department of Revenue launched a first-of-its-kind insurance verification system intended to decrease the number of uninsured drivers in Tennessee. One in five Tennessee drivers is uninsured. The Volunteer State ranks sixth in the nation for most uninsured drivers. The new system, available to law enforcement, will continually verify the vehicle policy information against every registered VIN in the state.



Oregon Senate President Peter Courtney is spearheading an effort to increase penalties for using mobile devices while driving. Under his bill, using a mobile device while driving could result in a 1 year prison term and fines up to $6,000. Multiple violations could result in 5 years in prison and a $125,000 fine. A new California law effective this week prohibits drivers from holding and operating their phones for any purpose, unless the device is mounted to a dashboard or windshield. Even then, it must be activated with only one finger tap or swipe. In Florida, lawmakers introduced legislation aimed at drivers under the age of 18 who text and drive, making the violation a primary offense. With safety commentators calling texting and driving an epidemic, expect increased legislative activity around mobile devices this year.


Making Our Way Around The Country


Among the last set of regulations published by the Obama Administration, the Occupational Safety and Health Administration (OSHA) issued a final rule that "clarifies" employers' "continuing obligation" to make and maintain an accurate record of each recordable injury and illness beyond the Occupational and Safety Act's six-month statute of limitations. The final rule is scheduled to become effective on January 18, 2017, just before Inauguration Day.



The Centers for Medicare & Medicaid Services (CMS) examined its process for addressing requests for CMS to "re-review" approved Workers' Compensation Medicare Set-Aside Arrangement (WCMSA) amounts. CMS expects to update its existing re-review process to address situations where CMS has provided an approved amount, but settlement has not occurred and the medical care that supported the approved amount has changed substantially.



Governor Bruce Rauner has gone on the offensive in his tilt with the Illinois General Assembly. He published an op-ed in Crain's Chicago Business this week urging the Illinois General Assembly to reform the state's workers' compensation system. The governor noted that Illinois' total employment peaked in 2000 and that the state would have added 600,000 jobs since then if it would have kept pace with the rest of the nation's economic growth. He claimed the state's "uncompetitive workers' compensation system" is a deterrent for business owners.


In its Biennial Report to the 85th Legislature, the Texas Division of Workers' Compensation found that the percentage of private, year-round employers that were non‐subscribers to the workers' compensation system decreased significantly, from 33 percent in 2014 to 22 percent in 2016. This is the lowest percentage since 1993. And, across the Capitol complex, a Texas district court judge in Austin upheld a long-standing contested work comp issue by siding with the state's right to regulate fees paid to air ambulances for transporting patients covered by workers' compensation insurance.


This time of the year brings out the "resolution manager" in all of us. If you are still in the market for a resolution or two for 2017, here is an insurance industry slate of recommended resolutions. And, as much as we appreciate your readership across our social media platforms and on your mobile devices, we urge you to join the tech safety community in resolving to eliminate electronic distractions while driving. Have a safe and prosperous New Year from all of us at The Way!

About The Way

The Way is Gallagher Bassett's weekly governmental briefing on state and federal affairs that affect our industry. We thank you for starting your Wednesday morning with us. Please be sure to follow #GBTheWay for additional news and updates as we make our way throughout the country on the issues affecting our industry. For more information, please connect with GB on LinkedIn, follow us on Twitter, or contact the authors, Greg McKenna or Cari Miller, directly. 


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