In the insurance industry, protecting customer data during digital transactions is complex and requires a multifaceted approach. Today, wholesalers, MGAs, and carriers must be committed to privacy, including cybersecurity measures.
Digital transactions and their impact on the industry
Insurance entities face unique challenges when protecting customer data during online transactions. As more companies interact with their broker clients digitally, data privacy and security have become paramount.
Key issues affecting the industry regarding digital transactions
- Escalating data breaches. Increased digitization of many processes and transactions used in the insurance industry by wholesalers, MGAs, and carriers can compromise customers’ sensitive personal information and expose it to hackers.
- Rapidly evolving technologies. As companies use machine learning and other technologies to streamline transactions, they must adapt their data protection strategies accordingly. This includes keeping pace with new digital capabilities to ensure customer data remains private.
- Maintaining customer trust. Wholesalers, MGAs, and carriers that neglect to implement protocols for protecting customer data can face regulatory enforcement actions, fines, litigation, and a loss of customer trust and goodwill. This can damage business relationships between wholesalers, their brokers, and end customers.
- Adhering to changing privacy and protection laws. The insurance industry is subject to some of the nation’s most stringent and comprehensive data privacy protection laws and regulations. These laws often have different and even incompatible provisions regarding what categories and types of personal information companies must protect, what entities are covered, and what constitutes a security breach.
- Data management. Digital transactions have increased the amount of data that wholesalers, MGAs and carriers handle. While technology has made data more accessible and usable for companies, managing it effectively to safeguard against unauthorized access and breaches has become a significant challenge.
- Ensuring regulatory compliance. The U.S. has yet to develop a uniform and comprehensive regulatory method for insurance wholesalers, MGAs, and carriers to manage and protect customer data. This has resulted in competing laws between regulations at the federal level and those established by individual states, creating challenges for companies to ensure they are acting in compliance with all relevant laws and regulations regarding data privacy.
Customer Data Protection: What’s the Takeaway?
With the right solutions, insurance intermediaries can protect their customers while using today’s digital tools and platforms. One way to do this is to work with a Software-as-a-Service provider that has earned an SOC 2 Type II compliance certification.
Considered the gold standard for InsurTech businesses, SOC 2 Type II compliance helps insurance entities ensure that the third-party tech companies they partner with have security measures in place to protect sensitive customer data during digital transactions while preventing potential financial losses and maintaining trust with stakeholders.