Pennsylvania Insurance Data Security Act: A Comprehensive Guide

Pennsylvania Insurance Data Security Act of 2025: A Comprehensive Guide

Introduction: Understanding the Pennsylvania Insurance Data Security Act

The Pennsylvania Insurance Data Security Act (PIDSA), signed into law as Act 2 of 2023, is a crucial regulatory measure designed to enhance cybersecurity within the insurance industry. It aligns with national cybersecurity standards and mandates specific security controls for insurance licensees operating in Pennsylvania. This framework aims to safeguard sensitive consumer information and fortify the industry’s overall cybersecurity posture.

The Act became effective on December 11, 2023, with phased compliance deadlines extending through 2026. For small and medium-sized businesses (SMBs) in the insurance sector, understanding and implementing these regulations is essential not only for legal compliance but also for maintaining customer trust and operational integrity.

1. Who is Affected by the Regulations?

1.1 Scope of Coverage

The Pennsylvania Insurance Data Security Act applies broadly across the insurance sector. It specifically impacts:

• Insurance companies licensed to operate in Pennsylvania
• Insurance agencies and brokers
• Third-party administrators handling nonpublic information
• Insurance producers
• Rating organizations

However, some exemptions apply. Licensees with fewer than 10 employees, less than $5 million in gross revenue, or less than $10 million in total assets may be exempt from specific sections of the Act.

2. Key Compliance Requirements

2.1 Information Security Program

Licensees must establish a comprehensive written information security program tailored to their risk assessment. This program must include:

• Identification of cybersecurity threats
• Implementation of appropriate safeguards to manage risks
• Regular evaluation and updates to security policies

2.2 Risk Assessments

Licensees are required to conduct regular risk assessments to:

• Identify internal and external threats
• Assess the likelihood and potential impact of these threats
• Evaluate and improve security policies, procedures, and technologies

2.3 Incident Response Plan

Each licensee must maintain a written incident response plan that outlines:

• Roles and responsibilities during an incident
• Internal and external communication protocols
• Remediation strategies
• Incident documentation and post-incident analysis

3. Cybersecurity Event Reporting

3.1 Definition of a Reportable Event

Not all security incidents require reporting. A cybersecurity event must be reported if it involves nonpublic information and has a reasonable likelihood of materially harming consumers or the licensee’s operations.

3.2 Reporting Timeline

Licensees must notify the Pennsylvania Insurance Commissioner within five business days after determining that a reportable cybersecurity event has occurred. The notification should include:

• Details of the incident
• Discovery date and data compromised
• Actions taken to mitigate risks
• Ongoing updates as new information emerges

4. Additional Compliance Measures

4.1 Board and Executive Oversight

Corporate leadership plays a crucial role in cybersecurity compliance. Boards of directors or governing bodies must:

• Conduct annual reviews of the security program
• Allocate adequate resources to cybersecurity efforts
• Stay informed about cybersecurity threats and response capabilities

4.2 Third-Party Service Provider Oversight

Recognizing the risks posed by external vendors, the Act requires licensees to:

• Conduct due diligence before engaging vendors
• Require vendors to implement strong security measures
• Regularly assess vendor compliance with security standards

4.3 Employee Training and Record Retention

Human error is a major factor in cybersecurity incidents. To mitigate this risk, the Act mandates:

• Annual cybersecurity awareness training for all employees
• Specialized training for personnel handling sensitive data
• Five-year retention of records related to cybersecurity events and compliance efforts

5. Compliance Deadlines

• December 11, 2024 – Licensees must implement risk assessments, information security programs, and corporate oversight measures.
• December 11, 2025 – Licensees must establish third-party service provider oversight programs.
• April 15, 2026 – Each Pennsylvania-domiciled insurer must submit an annual written compliance certification to the Insurance Commissioner.

6. Enforcement and Penalties

The Pennsylvania Insurance Department is responsible for investigating compliance with the Act. Failure to comply can result in:

• Monetary fines
• License suspension or revocation
• Additional regulatory scrutiny and corrective actions

Conclusion: Ensure Your Agency is Compliant

The Pennsylvania Insurance Data Security Act represents a landmark step in safeguarding consumer data and reinforcing cybersecurity practices in the insurance industry. Compliance is not just about meeting regulatory standards—it’s an opportunity to strengthen security and build trust with customers.

Are you confident that your agency is fully compliant with the Pennsylvania Insurance Data Security Act? Don’t wait until it’s too late—schedule a free consultation with our cybersecurity experts today. We’ll assess your current security posture, identify gaps, and provide actionable steps to ensure compliance.

Schedule Your Free Consultation Now

Taking proactive steps today will not only help you avoid penalties but also reinforce trust and security for your clients. Contact us now and take control of your agency’s cybersecurity future.