The importance of cybersecurity in the insurance industry has increased significantly in the past few decades due to digitization. Insurers require tons of sensitive customer data to write and manage policies. Those policies are now mostly online making them vulnerable to cyber-attacks.
This article will discuss the importance of cybersecurity in the insurance industry and how insurance companies can protect themselves and their clients from cybersecurity breaches.
Understanding the significance of cybersecurity in insurance
As a result of the digitization boom in the insurance industry over the past 20 years, the importance of cybersecurity in insurance is paramount. Insurance companies and agencies store large amounts of personal information about their clients. This makes them a prime target for cybercriminals.
One of the biggest cyber insurance trends in 2023 is the digital demand for services. Insurance customers want access to insurance services 24/7/365 online and on their smartphones. This demand makes their sensitive information vulnerable to cyberattacks. The onus is on insurance providers and agents to provide adequate cybersecurity to protect policyholders.
The rise of cyber threats
In January 2023, the personal information of over 2 million Aflac life insurance and Zurich auto insurance policyholders in Japan was leaked in a third-party data breach. The CEO of cybersecurity firm Grip Security, Lior Yaari, said:
“Whether it’s a third-party, former employee, overly permissive grants, or dangling access on zombie accounts, the opportunity to exploit credentials and thereby gain access to sensitive information has never been more appealing.”
It is clear that cybersecurity threats in the insurance industry are on the rise. The types of cyber threats insurance companies face include:
- Ransomware attacks
- Data breaches
Insurance industry-specific cybersecurity challenges
Insurance companies must collect massive amounts of data from their policyholders. They also must store this data and share it internally. The number one cybersecurity challenge in the insurance industry is protecting this massive amount of data from cyber attacks.
The reason for this is the exposure to financial liability caused by a data breach or lapse in cybersecurity. The results of such an attack could be devastating to an insurance company’s bottom line and reputation.
The role of cyber insurance
Cyber insurance products have become popular in the last few years as a way for all types of companies, not just insurance companies, to mitigate cyber attack liabilities. However, cyber insurance is not a replacement for cybersecurity.
Cyber insurance should only be used to complement security measures and processes. Cyber insurance can protect businesses from the financial fallout caused by cyber attacks. A few of the costs cyber insurance will cover include:
- Legal fees
- Public relations efforts
- Business interruption
The benefits of a strong cybersecurity strategy
Cybersecurity for insurance companies is a significant investment that does pay off in the long run. Cybercriminals are constantly evolving and becoming more sophisticated which is why insurance companies need to evolve with them.
Here are a few of the benefits of having a robust cybersecurity strategy for insurance companies:
- Gain a deeper knowledge of your cybersecurity risks
- Improved customer trust
- Establish a competitive edge in the market
- Reduce exposure to potential cyber attacks
- Early detection of cyber attacks
Collaboration between insurance companies and cybersecurity experts
Technology often moves faster than security measures. An issue insurance companies constantly face is fulfilling the demand for digitization while also protecting customer data. This is why it is important to have collaboration between insurance companies and cybersecurity experts in order to develop comprehensive risk management strategies.
Another reason for this collaboration is the everpresent oversight of state and federal insurance regulators. Regulators are continuously monitoring cybersecurity measures in the insurance industry to ensure consumers are being protected.
Emerging technologies and their impact
Multiple emerging technologies, such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT) have the potential to benefit cybersecurity in the insurance industry.
Machine learning, or AI, has the potential to help prevent human error in insurance policy writing and processing. It can also help prevent potential threats by using historical data and preventing past mistakes.
Blockchain technology can provide a network of controlled access for insurers. It can also mitigate insurance industry cybersecurity challenges by providing a way to safely share information.
IoT uses data from connected devices to improve the understanding of cybersecurity risks in the insurance industry.
Creating a culture of cybersecurity awareness
Cybersecurity for insurance companies is the responsibility of every stakeholder. Cyber criminals will exploit human errors and weaknesses, which is why every employee needs to be aware of cyber threats and trained to help recognize and prevent them.
Every insurance company needs to conduct regular training and education for its employees on the topic of cybersecurity. The goal of providing these resources to employees is to minimize human error risks and strengthen your cybersecurity strategies company-wide.
Regulatory landscape and its influence
The importance of cybersecurity in insurance goes beyond the potential impact on companies and their customers; cybersecurity measures are now being required by law.
The passage of regulations, such as the General Data Protection Regulation (GDPR) by the European Union, and the New York Department of Financial Services Cybersecurity Regulation (NYCRR) in New York state, has made cybersecurity measures in the insurance industry a requirement. These laws, and more on the way, put the onus and the liability on insurance companies to protect customer data and alert customers in the instance of a data breach.
The future of cybersecurity in the insurance industry
Cyber threats are only projected to increase in the coming years and insurance companies need to be prepared for unseen advancements in cyber attacks. The importance of cybersecurity in insurance is ever-changing and fluid. Insurance companies need to employ a robust cybersecurity strategy and pay attention to emerging threats and developments.
Remote work is going to continue into the future and it is imperative insurance companies take measures to protect themselves from these unsecured environments. Cyber criminals have been exploiting remote work and distracted employees throughout the last few years and the trend projects to continue.
Insurance businesses need to take measures to secure their company against cybersecurity threats today and in the future.
If you are an independent insurance agent interested in our platforms for branding, lead generation, social media, SEO, and CRM capabilities, contact us today to schedule a free demo!