GDPR and PIPA Compliance
First published in The Captive Review, Bermuda Report 2018
The EU’s General Data Protection Regulation (GDPR), which came into force on 25 May 2018, establishes a single set of EU data protection rules designed to allow individuals to better control their personal data. A key component of GDPR is that it will impact non-EU organisations. There are significant penalties for breaching GDPR and so non-EU organisations ignore their obligations under this new EU regulation at their peril.
GDPR extends to data controllers and data processors located outside the EU, where data is processed in connection with the offer of goods and services to individuals in the EU or who monitor their behaviour. Of particular note, insurance and reinsurance companies located outside of the EU (and, therefore, operating outside of scope of the existing EU data protection regime) may find themselves to be subject to GDPR if they insure/reinsure EU customers.
While the ever-increasing scope of international regulation may be lamented in some quarters, it is welcomed by those who wish to live and work in a modern, sophisticated and protected environment. But, in the case of laws that have an extraterritorial impact, it is sometimes difficult for companies to gauge whether or not their activities fall within the accepted parameters of such laws. The good news for Bermuda entities is that the Personal Information Protection Act 2016 (PIPA) is due to come into full effect by December 2018.
PIPA will apply to every organisation that uses personal information by automated means and personal information used other than by automated means that forms part of a structured filing system. It will also regulate the use of personal information by organisations in a manner which recognises the need to protect the rights of individuals In relation to their personal information and the need for organisations to use personal information for legitimate purposes.
PIPA was prepared with the specific aim of achieving adequacy in the EU, thereby enabling the free flow of personal data between EU member states and Bermuda. As a result, there are similar themes underpinning GDPR and PIPA, such as:
organisations are to provide a significant amount of information to individuals at the time of collection of their data
data subjects have the right to obtain confirmation that their data is being processed and to access that personal data to respond to a subject access request (one month with GDPR and 45 days with PIPA)
personal data should not be kept for longer than is necessary to fulfil the purpose for which it was collected (prescribed data retention periods are not set out in either law but an analysis will need to be undertaken to determine how long different types of data should be retained)
if data subjects wish to have their data removed, and the data is no longer required for the reasons for which it was collected, then it must be erased
international transfer of data is permitted, provided certain criteria have been satisfied.
As a result, by complying with one regime, Bermuda companies will ensure they are well placed to comply with the other.
Compliance with these new regimes will become an important part of the day-to-day operations of most companies, and Bermuda companies would do well to ensure they satisfy their obligations under PIPA and GDPR because the consequences for breach are considerable and include:
GDPR: a maximum fine of €20m or 4% of annual worldwide turnover
PIPA: corporations may be fined up to BM$250,000, while individuals may be fined up to BM$25,000 and/or imprisoned for a term of two years.
GDPR will extend to the operations of Bermuda companies in the EU, and PIPA will apply to all Bermuda companies. Bermuda insurers, in particular, will be affected by these regulatory regimes due to the nature of their business. With GDPR now in effect, and PIPA following close behind, the importance of compliance cannot be underestimated.
