The Importance of Cyber Security for Insurance Companies: Safeguarding Customer Data

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Ways New Technologies Transforming Insurance Industry

Do you think your Insurance company is out of the radar of cyber attacks?

As technology advances, so do cyber threats, and insurance companies are not immune. Insurance providers are prime targets for hackers due to the vast amounts of sensitive customer data they handle.

In 2020, the insurance sector experienced a 50% increase in reported cyber attacks compared to the previous year, highlighting the urgent need for robust data protection measures.

To ensure cyber security for insurance companies they comply with all applicable laws, rules, and standards and to better protect their client’s personal information. In this blog, we will walk you through the top data protection best practices that insurance companies can implement to keep their customer’s data secure.

Types of Data Insurance Companies Work With

To better underwrite risks and serve their clients, insurance companies process their customers’ personal information. Only with complete and accurate information from customers, insurance businesses can create viable and sustainable products & services.

Information regarding clients’ health and criminal records. For example, it is necessary for insurance companies to implement risk-based premium pricing and handle claims. An employment contract serves as the legal basis for insurance coverage issued on behalf of an employee.

Insurers acquire a wide variety of personal information from their customers, including details about their health, their homes, their cars, and even their pets, depending on the services they offer. The most common forms of private information in the insurance sector are as follows:

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Most of the information collected by insurance companies is sensitive and personal and must be safeguarded. The next part of this article offers commentary on the current insurance industry data hack.

Breaches of Data Protection in the Insurance Sector

In the Insurance industry, cyberattacks frequently don’t target systems but rather negligent personnel and subcontractors.

Verizon’s 2022 Data Breach Investigations Report found that phishing, credential theft, and ransomware assaults were the most prominent forms of an external attack against businesses in the insurance and banking sectors.

Employees frequently err, for example by incorrectly conveying crucial information. Insurance fraud can also be committed by malicious insiders who hope to gain financially by cheating their company.

Some recent high-profile insurance data breaches are as follows:

  • In October of 2022, a significant data breach occurred at Medibank, an Australian health insurance provider. The incident began with the theft of credentials from a user with administrative privileges within the Medibank network. The compromised credentials were later sold on the dark web and used to get access to private information belonging to Medibank’s customers. The outcome was that 200 GB of data, including the personal information of 9.7 million Medibank members, was stolen.
  • The American insurance company Aflac Inc. had a data breach in January 2023 due to a vendor’s flaw. The data of 1.3 million people with cancer insurance in Japan were stolen by hackers. Names, ages, and genders of policyholders, as well as the types of insurance they held, were among the compromised data.
  • Zurich Insurance Group had a data breach involving a third-party contractor almost simultaneously with the Aflac incident. Over 757,000 current and former auto insurance policyholders had their information exposed due to the incident. It’s possible that details such as last names, gender, birth dates, email addresses, vehicle makes and models, and more were shared.

Loss of trust from customers and severe fines are possible outcomes of data breaches. Even insurance companies could be put in danger. This is the reason why cyber security in insurance is important.

Insurance Company Security Requirements

Insurance companies are subject to severe penalties for failing to comply with data privacy regulations. Let’s take a look at the primary acts, standards, and laws that mandate cyber security in the insurance industry.

The following regulations must be met by businesses that collect and process personal information to sell insurance policies:

To protect personal data:

  • The purpose of the General Data Protection Regulation (GDPR) is to protect the private data of people residing in the European Union. Regardless of the location of the insurer's registered office or place of commercial activity, the insurer must nonetheless comply with GDPR standards if it offers its services to EU residents.
  • The personal information of California citizens may not be collected, used, or sold without first complying with the California Consumer Privacy Act (CCPA). The CCPA mandates certain disclosure duties and other procedures for insurance companies doing business in California.
  • How private organizations in Canada gather and use Canadian citizens' personal information for commercial purposes is governed by the Personal Information Protection and Electronic Documents Act (PIPEDA). All insurance companies in Canada must follow PIPEDA's rules.

To protect healthcare data:

  • In the United States, the collection, storage, and processing of health-related data are governed under the Health Insurance Portability and Accountability Act (HIPAA). The purpose of HIPAA is to safeguard patients' health information from being misused. HIPAA mandates strict security measures for all US health insurers handling patient information.

To protect financial data:

  • The Gramm-Leach-Bliley Act (GLBA) is a law in the United States that mandates the disclosure of information-sharing practices to policyholders and the safeguarding of personal information. Insurers are also obligated to monitor staff behavior, particularly regarding the use of confidential client information.
  • The purpose of the Sarbanes-Oxley Act (SOX) is to improve the accountability and safety of US insurance companies. It safeguards monetary documents and stops fraudulent activities as well. Insurance companies must keep detailed records of all communications and financial transactions and use specialized SOX compliance software to ensure they are in full compliance with SOX regulations.
  • Credit card transactions are protected by the PCI DSS (Payment Card Industry Data Security Standard). If an insurance company takes credit cards as payment (for example, for policy premiums), then it must have a PCI DSS compliance solution in place.

5 Essential Strategies for Data Protection Compliance in the Insurance Sector

Insurance providers may find it difficult to meet data security standards. If you want to protect your clients’ private information while spending as little time as possible doing so, hire Agile software company for implementing the following best practices:

1. Build a Risk-Aware Culture

Step one entails the acknowledgment that every employee constitutes a potential hazard, attributed to actions such as the opening of suspicious email attachments, employment of infected flash drives, or failure to execute crucial security patches on their computer. A prudent investment of valuable resources and time into educating personnel about cybersecurity risks and preventative measures can safeguard both the organization and its human capital from harmful cyber threats.

2. Defend the Workplace

It is crucial to ensure that all devices, ranging from laptops and printers to smart TVs, that are connected to a network are updated with the most recent security software and patches. Additionally, strict adherence to cybersecurity management policies and enforcement measures must be exercised to guarantee comprehensive protection against potential cyber threats.

3. Regularly Backup all Your Data

Whether your valuable data is stored on-premise or in the cloud. It is critical to prioritize its protection by employing a reliable backup and recovery solution that meets or exceeds the expectations of your business. In recent times, a substantial number of companies have opted for cloud-based applications like Google Workspace, Salesforce, and Office 365.

Nevertheless, many remain oblivious to the fact that SaaS providers primarily focus on restoring data lost due to system failures. These are often incapable of recovering data that has been deleted accidentally or deliberately by users, or locked by ransomware, hacking, malware, or similar threats. To prevent the consequences of data loss and downtime, it is imperative to incorporate automated SaaS data backup systems. These systems will provide point-in-time restore features into your business operations.

4. Security By Design

The implementation of services before considering security measures often leads to one of the most significant vulnerabilities in information systems, coupled with wasteful expenditure. Thus, it is essential to incorporate security measures into your IT initiatives from the outset and conduct routine tests to ensure adherence to compliance standards. By doing so, you can safeguard your information systems against potential security breaches and guarantee that the security measures remain efficient and effective over time.

5. Control Network Access

Companies that control the flow of registered data through supervised access points are better equipped to identify and isolate malware effectively. Therefore, it is crucial to implement procedures for managing employee access and permissions. In case of an employee’s departure, it is equally important to have the necessary controls in place to withdraw their access to sensitive information related to the company, clients, and vendors. By doing so, you can maintain the confidentiality and integrity of the data, preventing any unauthorized access, manipulation, or exposure.

Conclusion

Personal identifiable information (PII) is held by insurance companies for nearly every individual, and these establishments must protect this data and have comprehensive security measures in place. However, an analysis by Accenture found that 55% of insurers lack confidence in their ability to effectively monitor unauthorized access attempts.

Agile Soft Systems’ custom insurance software development services in USA, can assist insurance companies in safeguarding against cyber attacks by providing customized security solutions that address their specific needs. Our team of experts can conduct a thorough risk assessment to identify potential vulnerabilities and implement proactive measures to prevent breaches. Contact Agile Soft Systems at +1(510) 679-6791 or [email protected] to learn how we can help your insurance company protect against cyber attacks and safeguard your customers’ personal information.