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The protection of customer data is crucial for insurance companies, making cyber security a top priority.
Is your insurance provider at risk of being targeted by cyber-attacks?
With the continuous evolution of technology, cyber threats are also on the rise. Even insurance companies are not exempt from these risks. They are highly vulnerable to cyber-attacks because of the large quantities of confidential information they manage on behalf of their clients.
According to a study published in 2020, there has been a significant rise of 50% in cyber attacks reported in the insurance industry compared to the previous year. This emphasizes the criticality of implementing strong data protection measures.
To guarantee cyber security within the insurance industry, companies must adhere to relevant laws, regulations, and standards. This is crucial for safeguarding the personal information of their clients. In this blog, we will guide you through the most effective data protection strategies that insurance companies can adopt to maintain the security of their customer’s data.
Data Types Handled by Insurance Companies
Insurance companies collect and analyze their clients’ data to accurately assess risks and provide effective services for their customers. By obtaining complete and precise information from their clients, insurance companies can develop sustainable and valuable products and services.
Details about the medical and legal backgrounds of customers are imperative for insurance companies to determine appropriate pricing based on risk and process any claims. The insurance coverage provided to an employee is established based on an employment agreement, serving as the legal foundation.
Insurance companies gather a diverse range of personal data from their clients, such as information regarding their well-being, residences, vehicles, and even their animals, depending on the type of coverage they provide. The prevalent types of confidential data in the insurance industry are listed below:
The protection of sensitive and personal data is crucial for insurance companies while collecting information. In the following section, this article will provide an analysis of the recent data breach in the insurance industry.
Data Protection Violations in the Insurance Industry
- Within the Insurance sector, cyber threats often aim at personnel and subcontractors who are negligent, rather than targeting systems.
- According to Verizon’s 2022 Data Breach Investigations Report, phishing, credential theft, and ransomware attacks were the top methods used by external sources to target insurance and banking companies.
- It is not uncommon for employees to make mistakes, such as miscommunicating important information. In addition, there are instances where dishonest insiders may engage in insurance fraud to reap financial benefits at the expense of their employer.
The following are a few notable instances of insurance data breaches in recent times:
In the year 2022, Medibank, an Australian health insurance provider, experienced a major data breach which was reported in October. The incident originated from the theft of login credentials belonging to a user with administrative privileges within the Medibank network. These stolen credentials were then sold on the dark web and used by hackers to access the personal information of Medibank’s 9.7 million customers. As a result, 200 GB of data was compromised.
In January 2023, Aflac Inc., an American insurance company, also fell victim to a data breach due to a vulnerability in their vendor’s system. This breach resulted in the theft of data belonging to 1.3 million individuals with cancer insurance in Japan. The compromised information included names, ages, genders, and the types of insurance held by the policyholders.
Additionally, Zurich Insurance Group was also affected by a data breach involving a third-party contractor at around the same time as the Aflac incident. This breach exposed the personal information of over 757,000 current and former auto insurance policyholders. Potentially, sensitive details such as last names, genders, birth dates, email addresses, and vehicle makes and models were compromised.
Security Requirements for Insurance Companies
- The insurance industry must adhere to strict consequences if it fails to follow data privacy regulations. Let’s examine the main acts, standards, and laws that enforce cyber security within insurance companies.
- Businesses that sell insurance policies are required to comply with the following regulations when it comes to collecting and handling personal information:
To safeguard personal information:
• The main objective of the General Data Protection Regulation (GDPR) is to safeguard the personal data of individuals living in the European Union. Even if the insurer is located outside the EU, they are still required to adhere to GDPR standards if they offer services to EU residents.
• The California Consumer Privacy Act (CCPA) prohibits the collection, use, or sale of personal information of California citizens without following its regulations. Insurance companies operating in California have specific disclosure responsibilities and procedures to comply with the CCPA.
• The Personal Information Protection and Electronic Documents Act (PIPEDA) regulates the collection and use of personal information of Canadian citizens by private companies for commercial purposes. All insurance companies in Canada must abide by PIPEDA’s regulations.
To safeguard healthcare information:
In the United States, the management of health-related data, including its collection, storage, and processing, is regulated by the Health Insurance Portability and Accountability Act (HIPAA). The main objective of HIPAA is to protect patient’s health information from potential misuse. Under HIPAA, all US health insurers are required to implement stringent security protocols when handling patient data.
To safeguard financial information:
The GLBA is a legislation that is enforced in the United States, which requires insurance companies to disclose their information-sharing practices and secure personal data. Moreover, insurers are also required to monitor the behavior of their staff, especially when handling confidential information of clients. The objective of the SOX is to enhance the accountability and security of American insurance companies.
It ensures the protection of financial documents and prevents fraudulent activities. As part of compliance with the SOX regulations, insurance companies must maintain detailed records of all financial transactions and communications and utilize specialized software. The PCI DSS safeguards credit card transactions and must be implemented by insurance companies that accept credit cards as a form of payment, such as for policy premiums.
Top 5 Methods for Ensuring Data Protection Compliance in the Insurance Industry
Implementing data security standards can be a challenge for insurance providers. For an efficient and time-saving approach to safeguarding your clients’ private information, consider hiring an Agile software company to implement the recommended best practices:
1. Cultivate a Culture of Risk-Awareness
The first step involves recognizing that all employees have the potential to pose a threat, whether through actions like opening questionable email attachments, using infected flash drives, or neglecting to install important security updates on their computers. It is wise to invest resources and time in educating staff about the dangers of cybersecurity and ways to prevent them, to protect both the company and its employees from harmful cyber attacks.
2. Protecting the Workplace
To guarantee comprehensive protection against potential cyber threats, it is essential to make sure that all devices, including laptops, printers, and smart TVs, connected to a network, are equipped with up-to-date security software and patches. It is also important to strictly adhere to cybersecurity management policies and enforcement measures.
Step 3: Ensure to Regularly Back Up All of Your Data
It is crucial to prioritize the safeguarding of your important data, regardless of whether it is stored on-premise or in the cloud. This can be achieved by implementing a trustworthy backup and recovery system that meets or surpasses your business’s requirements. In recent years, a considerable number of businesses have chosen to use cloud-based platforms such as Google Workspace, Salesforce, and Office 365.
Despite this, numerous individuals are unaware that the main focus of SaaS providers is the recovery of lost data caused by system failures. These providers are often unable to retrieve data that has been intentionally or unintentionally deleted by users, or encrypted by ransomware, hacking, malware, or other types of security threats. To avoid the repercussions of data loss and downtime, it is crucial to implement automated SaaS data backup systems, which offer point-in-time restoration capabilities for your business operations.
4. Implementation of Security Measures from the Start
Failing to prioritize security measures and instead focusing on implementing services can result in a major security vulnerability in information systems and unnecessary expenses. Therefore, it is crucial to include security measures in IT projects from the beginning and regularly conduct tests to ensure compliance with standards. This approach will protect information systems from potential security breaches and maintain the effectiveness and efficiency of the security measures in the long run.
5. Managing Network Access
Effective identification and isolation of malware can be achieved by companies that have control over the flow of registered data through supervised access points. Hence, it is essential to establish protocols for managing employee permissions and access. In the event of an employee leaving, it is equally critical to have proper measures in place to revoke their access to confidential data about the company, clients, and vendors. This will ensure the security and privacy of the data, preventing any unauthorized manipulation, exposure, or access.
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