The Insurtech industry is revolutionizing insurance with technology, offering faster, smarter services that benefit everyone. Thanks to Insurtech companies, customers today enjoy instant claims processing, laser-fast customer service, and personalized policies. Insurers get real-time data insights that further fuel innovation. But with these advancements come new risks.

Insurtech companies are a prime target for cybercriminals. Why? Because they house vast amounts of sensitive personal and financial data. Protecting this information isn’t just a technical necessity—it’s essential for maintaining trust and integrity, both for customers and clients, but also for the industry. With this in mind, let’s explore cybersecurity risks and solutions for the Insurtech industry in 2024 and beyond.

Cybersecurity risks

Data breaches

In a data breach, unauthorized individuals (hackers) gain access to sensitive, confidential information. Data breaches are rife. For example, insurance broker Keenan & Associates suffered a major data breach in 2023, impacting 1.5M individuals. And back in January this year, life and health insurance giant Washington National Insurance Company fell victim to a SIM-swapping attack that saw over 20,000 people affected. More generally, annual data breaches in the US have increased more than threefold since 2012, while the average cost to US businesses has surged by 60%.

When it comes to data breaches, not all targets are equal, although all industries are impacted. For example, the industry that suffers the most data breaches is IT, software, and tech services. This may surprise some people because you’d expect companies in the tech sector to employ stringent cybersecurity measures. The truth is, that many companies are committed to cybersecurity, but tech companies, including Insurtech companies, are such a lucrative target that robust and quality cybersecurity measures are paramount.

It’s important to note that the term data breach specifically refers to the exposure or theft of data itself, but there are many methods through which data can be stolen, and each presents unique risks. Let’s look at some of the methods that result in a data breach.

Ransomware attacks

Ransomware attacks, where malicious software encrypts a company’s data and demands payment for its release, are one of the primary causes of data breaches. Ransomware attacks can bring a company’s operations to a standstill, leading to financial losses and data theft. For Insurtech companies, the consequences are severe: lost revenue, compromised sensitive information, and damaged client trust. Shockingly, 20% of the costs from ransomware attacks stem from the blow to a company’s reputation.

The most common entry point for ransomware attacks is phishing, which brings us to our next risk.

Phishing and insider threats

Phishing involves deceptive emails or messages that trick employees into revealing sensitive information or clicking on malicious links. For example, an employee might receive an email claiming to be from the CEO, urging them to act quickly on a fake invoice. These messages often create a sense of urgency, prompting hasty actions. Insider threats, whether intentional or accidental, pose additional risks. Employees with access to sensitive data can inadvertently or deliberately cause breaches.

Third-party vulnerabilities

Insurtech companies often rely on third-party vendors, which can introduce significant security risks. Vendors may have access to sensitive data and systems, creating potential entry points for cybercriminals. Many companies also use open-source code, which, while beneficial, can contain vulnerabilities. If hackers find these vulnerabilities, they can potentially access countless different software systems.

Threats in a tech-fueled world

One of the more pressing concerns today is how increasingly powerful software and systems are shaping the cybercrime industry. Cybercriminals are now using AI to craft scarily convincing phishing emails, making it harder to rely on traditional red flags like spelling and grammar errors.

Similarly, the rise of cybercrime-as-a-service has changed the landscape. Cybercriminals now offer ransomware software to aspiring hackers who may not be tech-savvy, for a monthly fee. This lowers the bar for entry, allowing more people to engage in cybercrime. The combination of AI-enhanced phishing and accessible cybercrime tools means companies must be more vigilant than ever in their cybersecurity efforts.

Solutions – combating cybersecurity risks in Insurtech

So, we’ve covered the risks, but how do Insurtech companies go about combating them? Let’s look.

• Advanced encryption:Implement robust encryption methods for protecting sensitive data both at rest and in transit. Use strong encryption standards like AES-256 to ensure that intercepted data remains unreadable without the correct decryption keys.
• Multi-Factor Authentication (MFA):Implement MFA to add an extra layer of security by requiring multiple forms of verification before accessing sensitive systems. This reduces the risk of unauthorized access, even if passwords are compromised.
• Regular security audits and penetration testing:Conduct regular security audits and penetration testing to identify and address vulnerabilities proactively. Comprehensive assessments help find and fix security gaps, keeping the company ahead of potential threats.
• Employee training and awareness:Regular training sessions for employees help them recognize phishing attempts and other cyber threats. Emphasize the importance of following security protocols and reporting suspicious activities to create a well-informed and vigilant workforce.
• Incident response planning:Develop and maintain a robust incident response plan outlining steps to take immediately after a breach is detected, including containment, eradication, and recovery processes. Regularly update and test the plan to ensure the team is prepared for an effective response.
• Stringent access control:Employ the principle of least privilege, where users only have access to the systems necessary to perform their jobs. This massively limits what data can leak during a phishing attack.
• Cybersecurity insurance:Invest in cybersecurity insurance to mitigate the financial impact of a cyber-attack. This insurance covers costs associated with data breaches, ransomware attacks, and other incidents, providing access to specialized response teams and resources for quicker recovery.

Wrapping up

In today’s hostile cyber environment, Insurtech companies are prime targets for attacks. Robust cybersecurity isn’t optional—it’s a must. By taking deliberate measures like advanced encryption, multi-factor authentication, and regular security audits, companies can protect their systems and keep sensitive data safe from malicious actors.