It's all over the news: companies suffer data breaches and customers wonder whether their personal information is at risk. With enough information, hackers could receive your credit card information or passwords to other accounts. It's also possible that an employee could make a mistake, leading to the release of confidential information. Could a data breach happen to your company? Even if you run a small insurance company, you still need to think about your cybersecurity.
What Does a Data Breach Look Like?
A data breach isn't necessarily a cyber-attack, though that's one of the many ways that your data could be breached. When you store information about your clients, you're automatically taking on a certain level of risk. You need to keep that information safe. For small insurance companies, a data breach could involve the following problems, or many more:
You accidentally send out personal information to the wrong person
You lose a portable drive on the way to a presentation
Someone breaks in and steals your laptop, and it's not encrypted
Your business suffers a cyber-attack, and you don't realize it for a while. According to Property Casualty, "Insurance companies experience on average 113 cyber attacks each year — with one out of every three successful in causing a data breach."
Your Data Security Risks
Your data is at risk because you have it on file. As long as you collect personal information from your clients, you need to keep it safe. You need to think about:
What data you collect. Your customers need to know what you're collecting and why. According to Decibel , "Misleading customers about how their data is collected, stored, used and protected can create legal and reputational problems for your business."
Your relationship with external data processing. For instance, you could rely on a credit card processing company to process or store that information for your business.
The training that your employees receive regarding using data management systems and managing confidential information.
The processes that you use to safeguard information, including data encryption
The physical security of your building.
The digital security of your online data storage, and how often you update these programs.
The places where you store personal data.
The systems that you use to protect data online and offline.
You Could Suffer Due to a Data Breach
A data breach isn't just a problem for your clients. It's a public relations nightmare. If your clients realize that your company has accidentally let go of some of their data or that their accounts have been hacked, they could be very upset. It's possible that your reputation could suffer.
You could also have clients who take you to court due to damages caused by the breach. For instance, if a client's personal insurance history gets sent to another client or if a client's financial information gets hacked, this could lead to personal embarrassment or financial damages for your client. In turn, they could sue your company for those damages, leading to financial problems for your insurance business. You must be honest about how you use your clients' data and about any data breaches, so your best bet is to ensure that these breaches do not occur.
At American Agents Alliance, we offer E&O insurance to help you manage if your employees make a mistake. Since mistakes happen, your company needs to be prepared. Talk with us today about how our insurance agent association can help your insurance agency succeed, and learn more about our membership benefits today.