Assigned to TAT FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
FACT SHEET FOR H.B. 2690
cybersecurity risk; insurance
Purpose
Establishes the Cyber Risk Insurance Fund (Fund) and outlines Fund administration.
Background
The Arizona Department of Administration (ADOA) must obtain insurance or provide for
self-insurance against property damage caused by clients and liability coverage resulting from the
direct or incidental care of clients participating in programs of Arizona and its departments,
agencies, boards or commissions relating to custodial care (A.R.S. § 41-621).
The Risk Management Revolving Fund and the Construction Insurance Fund are
established in ADOA for the purchase of insurance, risk management services, including loss
prevention services, payment of self-insured losses and administrative costs necessary to carry out
risk management services. ADOA must pay for claims processing costs, including adjusting costs,
legal defense costs and attorney fees, for any claims falling within state self-insurance coverage
(A.R.S. § 41-622).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Establishes the Fund within ADOA and specifies that monies in the Fund are continuously
appropriated for the purposes of the Fund.
2. Requires ADOA to obtain insurance against loss on the actual or suspected data breaches,
security system breaches or security incidents for select agencies, boards and commissions.
3. Adds losses arising out of actual or suspected data breaches, security system branches or
security incidents to the list of events covered by ADOA's self-insurance.
4. Allows the Director of ADOA to impose a deductible for a loss that arises out of an actual or
suspected data breach, security system breach or security incident on state departments,
agencies, boards and commissions.
5. Requires ADOA to include the replenishment of the Fund in the annual budget request.
6. Requires interest on any judgement against the State of Arizona paid for out of the Fund,
regardless of whether the funds are self-insured or funded by excess insurance, to accrue at the
average yield offered by the U.S. Treasury bills during the appeal. FACT SHEET
H.B. 2690
Page 2
7. Defines breach, security system breach and security incident.
8. Makes technical and conforming changes.
9. Becomes effective on the general effective date.
House Action
COM 2/15/22 DP 10-0-0-0
3
rd
Read 2/23/22 58-1-1
Prepared by Senate Research
March 3, 2022
RA/JM/sr