There are two words that throw the fear of god into the face of any insurance carrier:
regulatory compliance. The reason for the woe these words bring them is that instead
of getting easier, compliance has become increasingly more difficult.
The reasons are twofold. The regulatory landscape is expanding constantly. Insurers
not only deal with the traditional group of regulators from the 50 states, but they now
have to focus more energy on what the federal government expects from them. In
addition, as insurers position themselves for growth they increasingly turn to global
markets, which creates another set of issues.
Another regulatory challenge involves the privacy of a customer’s data and securing
it from unwanted intruders. Regulators never had to concern themselves with data
attacks on brick-and-mortar insurance carriers, but no one operates a business in that
manner anymore. Data is out there waiting to be snatched from thin air and that troubles not just regulators but all of us.
As Deloitte insurance advisor Howard Mills explains, the traditional job of regulators involves consumer protection and that has brought scrutiny to how carriers secure
their customer’s most important personal data. Insurers should relish that attention
because the second worry with unsecured data is the damage that befalls any company
when customers learn a company’s data systems have been breached.
Insurers can deal with unhappy customers and there are effective measures to
appease them, but the embarrassment to the insurer’s brand is a bigger issue as consumers make a mental note that a breached insurance carrier may not be the company
where they wish to place their business.
Insurers have enough concerns of their own in data security that some may see the
strong regulatory push as being heavy-handed, but regulations are likely to become
more complex and burdensome in the short term. The New York Department of Financial Services recently issued a report on cyber security that it believes will strengthen hacking defenses for carriers.
The DFS surveyed insurers with respect to cybersecurity and found a wide array of
factors affect the sophistication and comprehensiveness of a carrier’s cybersecurity program. While many believe the top tier of carriers have the most sophisticated defense
systems, the DFS study did not find that to necessarily be the case.
In short, regulators are going to keep an even closer eye on what is happening in
cybersecurity and Mills predicts it won’t take long for the other states to follow. ITA
robert regis Hyle
Cybersecurity Becomes Major
Concern for Regulators
THE MAGAZINE FOR INSURANCE IT & BUSINESS PROFESSIONALS
Editor in Chief
Robert Regis Hyle
Michael P. Voelker
Jason T. Williams
ITA Advisory Board
Tricia S. Blair
Lincoln Financial Group
Millers Mutual Insurance
Judith L. Haddad
Patriot National Inc.
American Family Insurance
Glatfelter Insurance Group
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March2015 // Issue 2 // Vol. 2