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Insurers Staying Secure with Cyber Security Technology

Shawn O'Rourke | August 17, 2015

How secure am I? How secure do I need to be? These are questions that have occupied the minds of CIOs, CSOs and CTOs for many years. However, recent high-profile security breaches have prompted these questions to be contemplated beyond the conference room and into the boardroom.

CEO’s and board members are now asking: How secure are we? How secure do we need to be? And with good reason. The year 2014 saw further reaching and more sophisticated exploitations on large and small companies alike.

According to the 2015 Internet Security Threat Report from Symantec, there were 317,000,000 new pieces of malware created in 2014. Ransom-ware attacks grew by an astonishing 4,000 percent. In these attacks the victim's files are encrypted and held hostage for a ransom. Ransoms are normally paid in bit-coins, a decentralized virtual Internet currency, and can amount to $250 or more per locked file.

To further complicate matters, companies are only as secure as their business partners. A recent BitSight Technologies study reported one-third of U.S. retailers who experienced a data breach within the past year were compromised through a partner relationship.

Insurance companies are certainly not immune. Even those companies that do not transact business online are finding their security postures weaker today than they were just a year ago. Two emerging factors play a significant role in reassessing an insurance company’s security.

First, there is a stark realization that it is not possible to protect against every cyber-criminal or cyber-attack. As hard as companies have tried, a determined, sophisticated cyber-criminal will eventually breach their defenses. Therefore, insurance companies must invest equal focus and emphasis on knowing when a cyber-criminal gets in and limiting the negative impact they may cause.

Second, Personally Identifiable Information (PII) and Personal Health Information (PHI) have eclipsed credit card numbers in criminal value. PII and PHI can yield as much as 10 times the value of a credit card number when used effectively by a cyber-criminal.

In the past, companies have primarily defended against hackers, individuals or small groups that have either malicious or criminal intent. Today, insurance companies not only need to defend against hackers, but according to the Department of Homeland Security, they must also prepare a cyber-defense strategy against foreign governments, terrorists, industrial spies, organized crime, and hacktivists. These groups’ motives range from low-level nuisance web page defacements, to direct financial and trade secret theft, all the way to espionage and serious regional or national disruption.

A company becomes the victim of a cyber-attack for three primary reasons:

  1. Because of what they have: Insurance companies are a rich source of PII, PHI, as well as credit card transactions, making them a prime target for cyber-criminals.
  2. Because of who they are or what they do: Because of a public industry position, or the role it plays, the insurance industry may make individual insurance companies a cyber-target. Likewise, an individual insurance company may be involved in litigation, or other high-profile event, making it a prime target for cyber-criminals.
  3. Because of where they are: Cyber-crime may be a crime of opportunity. Insurance companies transact business on the Internet, store data in the cloud, and send external email containing PII and PHI. Any of these activities may be visible to cyber-criminals, making the company a target.

A successful cyber-attack on an insurance company can impact that company in many ways including:

  • Disruption to insurance operations, resulting in lost productivity.
  • Financial loss from recovery costs, including credit reporting, reputation restoration, or litigation.
  • Data loss resulting in disruption to operations or impact to customer service.
  • Regulatory investigations, resulting in additional compliance reporting or fines.
  • Reputational damage to the brand, ultimately resulting in lost revenue.

 

So what should an insurer do today to protect itself from cyber-criminals? While the ultimate answer is different for each company, I can recommend three best-practices:

  • First, insurance companies must recognize cyber-security is not just an IT issue. It is an enterprise risk. It must be understood and managed corporately, just as any other risk that has the capability to significantly and negatively impact company results.
  • Second, insurers need to appropriately invest in a comprehensive security program that protects the company not only with technology, but from social engineering targeted at the company’s employees. The financial services industry, in aggregate, invests approximately 12 percent of its IT spend toward security. The insurance sector invests approximately seven percent. Because of the shift in value from credit card to PII, that gap in investment will need to close.
  • Finally, insurance companies need to be prepared with a response when a cyber-attack occurs. In addition to response plans and capabilities, carriers need to ensure they have cyber-defense insurance with coverages and capabilities matched to company needs. The right capabilities and resources executed as a front-line response to a cyber-attack can significantly mitigate longer-term negative impacts.

(Shawn O'Rourke is CTO with Farmington Hills, Mich.-based Amerisure Mutual Insurance Company. Amerisure and its affiliates target mid-sized commercial enterprises in manufacturing, construction and healthcare through strategically located core service centers across the U.S. For more information, visit amerisure.com.

 


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