NYDFS, insurance broker reach $3 million cyber breach settlement
On April 14, NYDFS announced a settlement with an insurance broker to resolve allegations that the broker violated the state’s cybersecurity regulation (23 NYCRR Part 500) by failing to report it was the subject of two cyber breaches between 2018 and 2020. Under Part 500.17, regulated entities are required to provide timely notice to NYDFS when a cybersecurity event involves harm to customers (see FAQs here). A September 2019 examination revealed that the cyber breaches involved unauthorized access to an employee’s email account, which could have provided access to personal data, including social security and bank account numbers. NYDFS also alleged that the broker failed to implement a multi-factor authentication as required by 23 NYCRR Part 500. Under the terms of the consent order, the broker will pay a $3 million civil monetary penalty and will make further improvements to strengthen its existing cybersecurity program to ensure compliance with 23 NYCRR Part 500. NYDFS acknowledged the broker’s “commendable” cooperation throughout the examination and investigation and stated that the broker had demonstrated its commitment to remediation.