This post is part of a series sponsored by AgentSync.
Data is at the core of the insurance industry. From the smallest independent agencies to the largest estate companies, insurance organizations of all sizes house data. This includes distribution channel data such as information collected and stored for the approval and designation of insurance producers and adjusters, as well as any consumer data these entities have collected in the process of selling policies.
Yes, the insurance industry runs a lot on data. However, this reliance on sensitive personal and financial information makes insurance organizations a target for cybersecurity attacks.
Cyber attack levels have increased in the insurance industry
Over the past decade, the insurance industry has gone through a tremendous digital transformation. Agencies, carriers, MGAs, and all other mid-level industry players have migrated away from manual workflows and legacy systems to robust digital solutions for their day-to-day operations.
Insurance organizations that prioritize technology are providing their employees, customers, and distribution partners with a seamless experience, but there is a price to improve. As the insurance industry moves to more digital channels, the risk of cyber-attacks increases exponentially.
As we mark Cybersecurity Awareness Month, we’ve now found the time to provide insight into some of the top cybersecurity risks insurance companies are currently facing and a few best practices to protect your data and your foundation from attack.
Key cybersecurity risks in the insurance sector
Data breach
When it comes to cyber attacks, data breaches are a top issue and one of the most important threats not only to insurance companies, but to almost every business in every industry. Even big-name players like Apple and Verizon have been victims of data breaches in the past. This is because hackers can access and expose an organization’s data in a number of different ways, including:
- Malware
- Internal threats
- Phishing crime
- Ransomware
- Application vulnerability
- Password guessing
- And much, much more
In March of 2024, Fidelity Investments Life Insurance Co. experienced a data breach that compromised the personal data of more than 28,000 of its customers. Cyber criminals obtained sensitive information including the names, Social Security numbers, bank accounts, and birthdays of Fidelity policyholders through a hack from one of their third-party providers.
In addition to financial losses, insurance companies may also face legal liabilities, damage to their reputation, and loss of trust from customers and partners due to violations.
Social Engineering
You wouldn’t give sensitive information to a stranger (we hope!) but what if you think the question is from someone you know and trust? Social engineering occurs when a cybercriminal tricks a person into providing confidential information, usually by pretending to be someone they trust. What may look like a harmless email from a colleague asking you to click a link or download a document, could actually be a clever way for hackers to get into your system and compromise your data.
Once criminals gain access to a system through social engineering, they can quickly launch other attacks such as malware distribution or data breaches, causing further financial and reputational damage.
Theft and Fraud
The shift to multiple digital channels and touch points means a significant number of financial transactions in the insurance industry are taking place online. While this makes things simpler and easier for everyone involved in distributing insurance, it also opens up businesses to a greater risk of fraud.
Cybercriminals are increasingly targeting insurance companies to commit fraud. From identity theft to more complex schemes like claim fraud, each year insurance fraud costs the industry an estimated $308 billion.
Protect your data and your content by following these online safety tips
While no company is 100 percent immune to cyberattacks, there are ways to reduce your risk. Insurance organizations can follow these tips to ensure their data is locked down, compliant, and safe from external threats:
Tip No. 1: It requires multi-factor authentication on all systems
Multi-factor authentication (MFA) has quickly become the standard for data protection in many industries, and insurance is no exception. MFA ensures that before a user can log into a system they go through at least two different authentication points.
Typically, MFA involves the user entering standard login credentials and a one-time passcode sent to them via text or email. Having multiple authentication checks makes it more difficult for unauthorized people to break in by stopping attackers from the second authentication step even if the password is compromised.
Tip No. 2: Prioritize ongoing security awareness training
As frontline defenders, employees play a critical role in identifying and mitigating risks such as phishing attacks, fraud, and data breaches. Providing (or better yet, requiring) regular training sessions can equip your team with the knowledge and skills they need to identify potential threats.
By demonstrating a commitment to ongoing cyber-security training, you foster a culture of vigilance in your organization. And because we in the industry know how quickly things can change and new things can emerge, ongoing training is necessary. Continuous education ensures that your employees stay up-to-date on the latest threats and best practices, strengthening their understanding of security compliance requirements.
Tip No. 3: Create an incident response plan
In the unfortunate event that your data is compromised, it’s always a good idea to have a response plan in place. Rather than fearing a cyber attack, creating a recovery plan is a proactive approach that can help minimize damage, minimize downtime, and preserve your overall reputation.
A well-defined plan improves preparedness by identifying potential hazards and outlining recovery strategies. When creating your plan, be sure to define clear procedures and responsibilities for responding to various incidents. And don’t forget to review and test your plan regularly to ensure that employees know their role.
Tip No. 4: Check the data integrity of the third-party vendor
Using third-party vendors is increasing in the insurance industry. With more insurance and agencies partnering with third-party providers for at least one aspect of their digital transformation, an organization’s data protection success depends on the security and integrity of any partnering software.
To ensure that your systems, and any vendor partners, are secure, compliant, and able to protect sensitive information, your organization needs a strong security framework. SOC 2 is a powerful framework designed to help businesses navigate the complex landscape of data protection and compliance.
Specifically, a SOC 2 Type II audit examines any controls and procedures a business has in place related to data security, availability, confidentiality, and privacy. Choosing vendors that have conducted a SOC 2 Type II assessment helps insurance industry businesses:
- Protect consumer data
- Maintain compliance
- Build trust with customers and partners
- Improve efficiency
- Reduce the risk
- Gain a competitive advantage
And that’s just to name a few benefits!
Data security should not be an afterthought
With more data and more breaches, the ability to withstand cyber attacks is quickly becoming a key requirement for insurance organizations. As cyber threats continue to evolve, prioritizing data security from the start ensures that robust defenses are integrated into all operational processes.
The best way to avoid cyber attacks is to be proactive in checking and updating your organization’s security standards and cyber-hygiene practices, as well as those of any software vendors you work with.
If you’re considering partnering with AgentSync for modern and seamless producer licensing and compliance management for your carrier, agency, or MGA/MGU, you can breathe easy. Our products are built on a trustless architecture and we are more than happy to walk you through all the ways we prioritize the security of your data. To learn more, check out the demo, or talk to an AgentSync expert today.
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