This post is part of a series sponsored by AgentSync.
Data is at the heart of the insurance industry. From the smallest independent agencies to the largest legacy carriers, insurance organizations of all sizes house data. This includes distribution channel data such as the information collected and stored to license and designate insurance producers and adjusters, as well as any consumer data collected by these companies in the process of selling policies.
Yep, the insurance industry pretty much runs on data. But this reliance on sensitive personal and financial information also makes insurance organizations a prime target for cyber security attacks.
Cyber attack rates have increased in the insurance industry
Over the past decade, the insurance industry has undergone a fairly extreme digital transformation. Agencies, carriers, MGAs and every other industry player in between have migrated away from manual workflows and legacy systems in favor of more robust digital solutions for their day-to-day operations.
Insurance organizations that prioritize technology modernization offer their employees, customers and distribution partners a more seamless experience, but progress comes at a price. As the insurance industry migrates towards more digital channels, the risk of cyber attacks increases exponentially.
As we wrap up Cybersecurity Awareness Month, we figured now is the time to provide an overview of some of the biggest cybersecurity risks insurance organizations currently face along with a few best practices to protect your data and your bottom line from an attack.
Key cybersecurity risks in the insurance sector
Data breach
When it comes to cyber attacks, data breaches are a major concern and one of the most significant threats facing not just insurance organizations, but virtually all businesses across all industries. Even big players like Apple and Verizon have fallen victim to data breaches in the past. This is because hackers can access and expose an organization’s data through a variety of methods, including:
- Malware
- Insider threats
- Phishing
- Ransomware
- Application Vulnerabilities
- Guess password
- And many, many more
In March 2024, Fidelity Investments Life Insurance Co. experienced a data breach that compromised the personal data of more than 28,000 of their customers. Cybercriminals obtained sensitive information including names, social security numbers, bank accounts and birth dates of Fidelity policyholders through a hack at one of their third-party providers.
In addition to financial losses, insurance organizations can also face legal liabilities, damage to their reputation and loss of customer and partner trust as a result of a breach.
Social Engineering
You would never give away sensitive information to someone you don’t know (we hope!), but what if you thought the question came from someone you knew and trusted? Social engineering occurs when a cybercriminal manipulates an individual into giving up confidential information, often by pretending to be someone the individual trusts. What may seem like a harmless email from a colleague asking you to click a link or download a document can actually be a clever way for hackers to infiltrate your systems and compromise your data.
Once hackers gain access to a system through social engineering, they can quickly implement other attacks such as distributing malware or data breaches, causing even more financial and reputational damage.
Theft and fraud
The shift to more digital channels and touchpoints means that a significant number of financial transactions in the insurance industry take place online. While this makes things easier and more convenient for everyone involved in insurance distribution, it also opens companies up to a higher risk of fraud.
Cybercriminals are increasingly targeting insurance companies to commit fraud. From identity theft to more complex schemes like claims manipulation, insurance fraud costs the industry an estimated $308 billion each year.
Protect your data and your bottom line by following these cybersecurity tips
While no business is 100 percent immune to a cyber attack, 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 #1: Require multi-factor authentication across all systems
Multi-factor authentication (MFA) has quickly become a standard for data protection in many industries, and insurance is no exception. MFA ensures that before a user logs on to a system, they have gone through at least two different authentication points.
Typically, MFA involves a user entering their standard login credentials along with a one-time code sent to them via text or email. Having multiple identity verification checks makes it harder for unauthorized people to sneak in by stopping attackers at a second authentication step, even if a password is compromised.
Tip #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. Offering (or better yet, requiring) regular training sessions can equip your team with the knowledge and skills they need to recognize potential threats.
By demonstrating a commitment to ongoing cybersecurity training, you foster a culture of vigilance within your organization. And because we in the industry know how quickly things can change and new innovations can emerge, continuing education is a must. Ongoing training ensures your employees stay up to date with the latest threats and best practices, strengthening their understanding of compliance requirements and security protocols.
Tip #3: Create an incident plan
In the unfortunate event that your data is compromised, it’s always a good idea to have a response plan in place. Instead of panicking after a cyber attack, creating a recovery plan is a proactive approach that can help minimize damage, reduce downtime and preserve your overall reputation.
A well-defined plan improves preparedness by identifying potential vulnerabilities and outlining strategies for recovery. When creating your plan, be sure to define clear procedures and responsibilities for responding to various incidents. And don’t forget to update and test your plan regularly to ensure employees are comfortable with their roles.
Tip #4: Assess your third-party vendor’s data hygiene
Use of third-party suppliers is increasing in the insurance sector. With more insurance companies and agencies partnering with third-party providers for at least one component of their digital transformation, an organization’s data security success depends on the security and readiness of any software it partners with.
To ensure that your systems, as well as any vendors you may work with, are secure, compliant and capable of protecting sensitive information, your organization needs a solid security framework. SOC 2 is a powerful framework designed to help businesses navigate the complex landscape of data protection and regulatory compliance.
More specifically, a SOC 2 Type II audit assesses all controls and processes that a company has related to data security, availability, confidentiality and privacy. Choosing suppliers that have performed a SOC 2 Type II audit helps insurance industry companies:
- Protect consumer data
- Maintain compliance
- Build customer and partner trust
- Improve operational efficiency
- Reduce the risk
- Gain a competitive edge
And that’s just to name a few of the benefits!
Data security should never be an afterthought
With more data and more breaches, the ability to be resilient to cyber attacks is quickly becoming a core requirement for insurance organizations. As cyber threats continue to evolve, prioritizing data security from the start ensures that robust defenses are integrated across all operational processes.
The best way to avoid a cyber attack is to remain diligent in assessing and updating your organization’s security standards and cyber hygiene practices with the software vendors you work with.
If you are considering partnering with AgentSync for more modern and seamless producer licensing and compliance management at your provider, agency or MGA/MGU, you can breathe a sigh of relief. Our products are built on a zero-trust architecture, and we’re more than happy to walk you through all the ways we prioritize your data security. To learn more, check out a demo or speak with an AgentSync expert today.
Subjects
Cyber Data Driven
