The boom of insuretech startups continues to disrupt the insurance industry with new technologies and innovative business models. As insuretechs become more prominent, building trust with consumers will be crucial for achieving long-standing success in the industry.
A large portion of this trust comes down to maintaining the security and privacy of policyholder data. Even as insurers leverage cutting-edge tools and technologies to improve their services, policyholders must be confident that their personal information is always secure.
The Challenges of Data Security and Privacy in Insuretech
Insuretech firms face unique challenges in safeguarding sensitive policyholder data, mainly because they handle vast amounts of sensitive consumer information. They collect a wide range of personal and financial data on policyholders to offer efficient service, personalized products, and more. This data is extremely valuable, often making insuretechs a target for cyberattacks and hacks.
Additionally, these companies must adhere to certain data privacy regulations like GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act). Staying compliant with these regulations can sometimes challenge insuretech startups with limited resources.
In the case of a potential data breach or mishandling of sensitive information, insurers and policyholders could feel the consequences. The companies could face financial and reputational loss if they experience a data breach and lose market share. Plus, they may receive fines and other legal and regulatory consequences if they are noncompliant with regulations. Policyholders with compromised data may become victims of identity theft and other crimes.
Best Practices for Safeguarding Policyholder Data
The risk of cyberattacks is only growing, with a reported 38% increase in incidents in 2022 compared to 2021. As a result, insuretechs need to have the proper data security systems and protocols in place to uphold the integrity of consumer data and prevent unauthorized access.
To best protect policyholder data and avoid adverse outcomes, insuretechs should implement the following data security best practices:
- Encryption: Data encryption will protect sensitive data while being shared or stored; it ensures data is unreadable or unusable, even if an unauthorized party accesses it.
- Access controls: Administrators should restrict access to consumer data based on users’ privileges and roles within the organization. User access should be logged and easy to audit in the case of a potential breach.
- Secure data storage: Only collect and store the minimum amount of data necessary for operations, properly dispose of data that is no longer needed, and make regular updates to storage systems to protect against vulnerabilities.
- Work with the right vendors: Insuretechs should carefully select and manage any third-party vendors and partners to ensure they meet data protection standards.
Creating a robust ecosystem of solid data security protocols and policies will help ensure that policyholder data remains secure and is only accessed for privileged use by authorized parties.
Communicating Your Commitment to Data Protection
Insuretechs can build trust with consumers by being transparent about their data protection policies and procedures. With this, they can make their privacy policy clear and easy to access and understand. The policy should outline how they collect, use, share, and protect policyholder data. If applicable, they can also direct users to where they can go to update their privacy settings and preferences.
Building a strong level of trust can increase policyholder loyalty and retention, help insurers build a better reputation in the industry, and strengthen their growth potential. With so much competition in the space today, insuretechs that offer strong data protection and can communicate their policies with consumers will grow their market share and see sustainable growth over the coming years.
Keep Consumer Data Safe with Insuresoft
The use of insuretechs will only grow as the industry becomes more advanced. 86% of insurers believe they need to innovate at an increasingly rapid pace just to stay competitive, and insuretechs can help them modernize their operations to better meet the needs of today’s consumers. But, they first need to overcome some key data security challenges.
Insuresoft’s Diamond platform can help you modernize operations and stay competitive with secure cloud hosting on Microsoft Azure. Through our managed services, we complete a full review and provide peace of mind by minimizing the risk of a breach. We review your current security profile, starting with identifying all devices connected to your network, and advise on how to make the environment more secure.
Contact us today to grow your reach and scale without letting data security and privacy fall through the cracks.
