The vital role of cybersecurity in life insurance
The ongoing shift towards data-driven, digitalized life insurance processes has improved outcomes for policyholders. Likewise, collaboration with software vendors has accelerated insurer’s innovative strides in the Life and Annuity (L&A) space.
However, this digital transition has also made insurance firms more attractive targets for cybercrime.
In many cases, insurance firms don’t discover they’ve been the target of an attack until it’s too late. Less than one week after last year’s infamous MOVEit hack, nearly 7 million patients of Delta Dental, the largest insurer in the U.S., had their financial information compromised.
In February, Fidelity Investment Life Insurance Co. discovered a third-party data breach that compromised the personal and financial information of 28,000 customers three months after it had occurred. A data breach that exposed the data of 1.5 million clients of Keenan & Associates, most of whom in the fields of education, healthcare, and public sectors, was only discovered five months later.
The list goes on.
Hackers profit from the troves of data life insurers gather to enhance their business models and customer service. Without comprehensive cybersecurity, compliance, business continuity and policyholder trust are all on the line.
What’s at stake
Policyholders entrust such personal data to life insurance companies – name, address, date of birth, social security, banking information and medical history. Maintaining trust, therefore, is vital to the life insurance sector.
A single data breach – even a small one – could be enough to alarm customers and tarnish an insurer’s reputation. To minimize that potential outcome, insurers can educate policyholders of their cybersecurity measures and, in turn, strengthen their relationship from a brand perspective. After all, policyholders are the ones paying insurers a premium to protect them and their families from unexpected circumstances.
That is why it is so critical that life insurers take a holistic approach to cybersecurity and integrate stringent protective mechanisms into every aspect of their operations. The information they store on their customers’ behalf is the very data cybercriminals can utilize to target them with fraud – crimes that drain life insurance consumers of more than $74 billion a year.
Encryption, multi-factor authentication and real-time monitoring are just a few of the measures that software vendors can leverage to prevent such fraudulent activities. Such solutions also help life insurers remain compliant with regulations such as GDPR in Europe and HIPAA in the United States, which mandate that organizations handling sensitive personal information adhere to strict data protection standards. Failure to do so adequately can result in severe penalties and reputational damage.
Business as usual
In addition to protecting sensitive data, preserving trust and preventing fraud, effective cybersecurity bolsters the resilience of business operations.
Life insurance companies rely heavily on their digital infrastructure to manage policies, process claims and communicate with policyholders. Cyberattacks that can damage these operations often lead to website and service outages. Though at times these are purposefully initiated by insurance companies following a suspected breach to prevent a data leak from spreading further, such outages mean that policyholders are at least temporarily unable to file claims, pay bills online or access other digital services. Life insurers who include incident response plans and disaster recovery protocols into their cybersecurity postures can recover from these events quickly and ensure their operations continue with minimal disruption.
Leveraging multiple layers of cybersecurity is also valuable for life insurers who invest heavily in intellectual properties – whether in collaboration with software vendors or developed on their own. Robust cybersecurity measures, including advanced access controls and real-time monitoring, safeguard proprietary information from theft and unauthorized access.
Cybersecurity – a must have
Comprehensive cybersecurity requires multiple practices and tools to safeguard insurance operations and sensitive policyholder data from evolving cyber threats like phishing, ransomware and cyber-espionage. Cybersecurity is a strategic imperative, fundamental to the life insurance sector’s operational integrity and growth. Without it, life insurers risk falling victim to such debilitating cyberattacks. Life insurers can only maintain their policyholders’ trust if holistic cybersecurity solutions are put in place to protect the very vulnerabilities initiated by the digital age.
