Why is Data Security Important in Insurance?
Robbie Sinclair, the head of security at NSW Australia once said that security is always excessive until it’s not enough.?
The advancement of technology and the internet has been the catalyst for the immense growth of several industries, including insurance. Data has been pertinent to the success of insurance since its inception.
Insurance corporations depend heavily on data for the successful execution of processes such as KYC information collection, policy documents, risk assessment, and claims processing.?
Protecting the information of countless policyholders that have been gathered through each of these processes from threats is the reason data security is crucial within the insurance ecosystem today. .?
Regulatory bodies such as The National Insurance Commission (NAICOM) mandate insurance companies to tighten their data protection measures and update them intermittently, heightening the trust of policyholders in their insurance providers.?
The following are five reasons that make data security important in insurance:?
Fraudulent claims are a challenge that has plagued several insurance organizations, causing many people to distrust and have apathy for the insurance industry.
The Nigerian insurance ecosystem loses up to 30 million Naira yearly to such claims and this sometimes necessitates an increase in the cost of insurance premiums.?
Insurance firms can use analytics and algorithms to quickly discover suspicious behavior patterns by policyholders and intercept them.
This will enable them to tighten their data breach preventive measures, avoid losses, and retain customer satisfaction.
Information such as driver’s license number, bank account number, home address, and phone number are classified under personal identifiable information (PII) because they can be used to identify an individual.?
Individuals have to provide these personal details to insurance companies to complete the KYC process and get insurance coverage.?
Insurance providers in possession of these types of sensitive information are mandated to keep this data secure to avoid the negative outcomes of a security breach such as monetary loss, sanctions from regulatory bodies, and lawsuits from policyholders.?
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New cybersecurity breaches and threats are developed by hackers daily. These hackers target the insurance ecosystem and other industries with access to sensitive information such as banking.?
Insurers must be proactive in protecting their clients’ information through investment in experienced cybersecurity professionals and systems to ward off various types of attacks and carry out test attacks to ascertain loopholes intermittently.?
The data that insurers collate from their policyholders is useful for improving internal processes ranging from sign-up to claims payout.
When the data is secure and uncompromised, it can be trusted to provide accurate analytics into insurance product adoption, policy renewal rates, risk customer satisfaction, risk assessment, claims processing, and payouts.
Insurance companies will use the information obtained from the analytics to improve their customer and product experiences.?
The insurance industry has a common goal however, the sphere and strategy of insurance organizations differ from one another.
These types of data are considered to be the trade secrets that give insurers an advantage over their competitors. Insurers must ensure that this information remains confidential, secure, and far from the reach of data thieves.
Failure to do so could be detrimental to the insurer’s growth.?
So Robbie Sinclair was right…
Data security is indeed always excessive until it’s not enough and that is why it is instrumental for insurance companies to function optimally. When insurers invest in extensive data security systems and cybersecurity professionals, their chances of being breached by hackers become incredibly low.?
Insurance companies can thrive and protect themselves by implementing data protection technology such as encryption, two-factor authentication, and APIs into their systems, keeping their policyholders' information safe.?
If you have any experience with data security strategies, tell us about them in the comments section. We would love to learn from you.?