Cybersecurity in Insurance: Why Your Data and Compliance Can’t Afford to Slip

Data is at the core 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 like the information collected and stored to license and appoint insurance producers and adjusters, as well as any consumer data these businesses collected in the process of selling policies.

Yep, the insurance industry pretty much runs on data. However, this reliance on sensitive personal and financial information also makes insurance organizations a prime target for cybersecurity attacks.

Cyber attack rates are up in the insurance industry

Over the last decade, the insurance industry has gone through a pretty 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 daily operations. 

Insurance organizations that prioritize tech modernization offer their employees, customers, and distribution partners a more seamless experience, but there’s a price to progress. As the insurance sector migrates toward more digital channels, the risk of cyber attacks increases exponentially.  

As we round out Cybersecurity Awareness Month, we figured now’s the time to provide an overview of some of the top cybersecurity risks insurance organizations currently face along with a few best practices for protecting your data and your bottom line from an attack. 

Key cybersecurity risks in the insurance sector

Data breaches

When it comes to cyber attacks, data breaches are a top concern and one of the most significant threats facing not only insurance organizations, but just about every business across every industry. Even big-name players like Apple and Verizon have fallen prey to data breaches in the past. This is because hackers can access and expose an organization’s data through a number of different methods, including:

• Malware
• Insider threats
• Phishing
• Ransomware
• Application vulnerabilities
• Password guessing
• And many, many 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 their customers. Cyber criminals obtained sensitive information including ‌names, Social Security numbers, bank accounts, and birthdates of Fidelity policyholders through a hack at one of their third-party providers. 

Beyond financial losses, insurance organizations may also face legal liabilities, damage to their reputation, and loss of customer and partner trust as a result of a breach.

Social Engineering

You’d never give away sensitive information to someone you don’t know (we hope!) but what if you thought the ask came from someone you knew and trusted? Social engineering occurs when a cyber criminal manipulates an individual into giving up confidential information, often by posing as someone the individual trusts. What can look like a harmless email from a coworker asking you to click a link or download a document, might 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 deploy other attacks like distributing malware or data breaches, causing even more financial and reputational damage.  

Theft and Fraud

The shift to more digital channels and touchpoints means a significant number of financial transactions in the insurance industry occur online. While this makes things easier and more convenient for everyone involved in insurance distribution, it also opens businesses up to a higher risk of fraud. 

Cybercriminals are increasingly targeting insurance companies to commit fraud. From identity thefts to more complex schemes like claims manipulation, each year insurance fraud costs the industry an estimated $308 billion. 

Protect your data and your bottom line by following these cybersecurity tips

While no company is 100 percent immune to a cyber attack, there are ways to lessen your risk. Insurance organizations can follow these tips to ensure their data is locked down, compliant, and safe from external threats:

Tip No. 1: Require multi-factor authentication across all systems

Multi-factor authentication (MFA) has quickly become a standard of data protection in many industries, and insurance is no exception. MFA ensures that before a user logs into a system they have gone through at least two different points of authentication. 

Typically, MFA involves a user entering their standard login credentials along with a one-time passcode sent to them via text or email. Having multiple identity verification checks makes it more difficult for unauthorized individuals to sneak in by stopping attackers at a second authentication stage even if a password is compromised. 

Tip No. 2: Prioritize ongoing security awareness training

As frontline defenders, employees play a vital role in identifying and mitigating risks like 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 cyber-security training, you foster a culture of vigilance at your organization. And because we in the industry know how quickly things can change and new innovations can arise, continuous training is a must. Ongoing education ensures your employees stay up to date on the latest threats and best practices, reinforcing their understanding of compliance requirements and security protocols.

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 panicking post cyber attack, creating a plan for recovery 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 crafting your plan, make sure to define clear procedures and responsibilities for responding to different incidents. And don’t forget to update and test your plan regularly to ensure employees are familiar with their roles. 

Tip No. 4: Assess your third-party vendor data hygiene

Using  third-party vendors is on the rise in the insurance sector. With more insurers 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 preparedness of any software is partners with. 

To ensure your systems, as well as any vendors you may partner with, are secure, compliant, and capable of safeguarding 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 any controls and processes a business has related to data security, availability, confidentiality, and privacy. Choosing vendors who’ve performed a SOC 2 Type II audit helps insurance industry businesses:

• Protect consumer data
• Maintain compliance
• Build customer and partner trust
• Improve operational efficiency
• Mitigate risk
• Gain a competitive advantage

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 outset ensures that robust defenses are integrated across all operational processes. 

The best way to avoid a cyber attack is to stay diligent in assessing and updating you organization’s security standards and cyber-hygiene practices, along with that of any software vendors you work with. 

If you’re considering partnering with AgentSync for more modern and seamless producer licensing and compliance management at your carrier, agency, or MGA/MGU, then you can breathe a sigh of relief. Our products are built on a zero-trust architecture and we are more than happy ‌to walk you through all the ways in which we prioritize your data security. To learn more, check out a demo, or talk to an AgentSync expert today. 

About AgentSync

AgentSync builds modern insurance infrastructure that connects carriers, agencies, MGAs, and producers. With customer-centric design, seamless APIs, automation, and unparalleled service, AgentSync’s solutions provide data intelligence and streamlined onboarding and compliance management processes that reduce costs, increase efficiency, and get producers ready to sell in hours instead of weeks. Founded in 2018 by Niranjan “Niji” Sabharwal and Jenn Knight, and headquartered in Denver, CO, AgentSync has been recognized as one of Denver’s Best Places to Work, a Forbes Magazine Cloud 100 Rising Star, and as an Insurtech Insights Future 50 winner, and was ranked 65 in Forbes – America’s Best Startup Employers 2023. To learn more, visit https://agentsync.io/