How cybersecurity is impacting the insurance industry

By Stewart Bowling, Courtney Hoff Dockerty

December 11, 2023 8:50 AM

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The risk of a cyber attack has become a reality for just about every organization, including insurers.

With a recent shutdown at American Family Insurance due to suspicious network activity showing how close to home the threat can be, cybersecurity is a major concern that is not going away any time soon.

Read our roundup to find out more about how the industry is managing the universal need for cybersecurity.

False sense of cybersecurity besets small businesses

Cybersecurity is definitely on the radar for small business owners, but they should be taking the threat of a data breach more seriously, according to new research from Embroker.

While 48% of survey respondents think they won't be targeted for an attack, 78% say they have already been the victim of a serious breach.

Despite this (over)confidence, many small business owners are investing in cyber coverage to make sure they have the ability to respond to an attack, with the added benefit of the insurance helping them to raise funding as well as meet federal requirements.

Read more:

Small businesses misunderstand their cybersecurity vulnerabilities

Unusual network activity triggers AFI systems stoppage

Cyber liability insurance coverage is becoming a must for many businesses, and insurers themselves are not immune to an attack.

After noticing suspicious activity on its network, American Family Insurance acted immediately to prevent any unauthorized access to company systems and customer data.

"Once discovered, we quickly took precautionary measures to protect data and resources and we shut down several business systems," said a company spokesperson. An investigation is currently in progress.

Read more:

American Family shuts down services after cyber attack

CPM gives insurers a marketing and data security boost

Insurance carriers that are using consent and preference management systems to improve the targeting of their customer marketing and communications initiatives are getting some help at the same time with privacy compliance.

While CPM systems are able to build a consolidated customer profile by pulling together data from different systems across an organization that can then be used for marketing purposes, they can also help carriers comply with a variety of state and federal privacy rules and regulations.

"These solutions offer significant cost savings by reducing the IT workload necessary to comply with data privacy, ethics due diligence and internal auditing," said Richard Huff, senior analyst at Madison Advisor and CPM specialist.

Read more:

Customer data management systems navigate privacy concerns

Cyber insurance becomes a necessity in tech spending

Cyber attacks have grown more frequent in recent years, forcing organizations to increase their outlay on cybersecurity defenses and crucially insurance, according to a recent study by Moody's.

Although most survey respondents intend to either maintain (82%) or increase (16%) their spending on cyber insurance coverage, which is now regarded as vital, this could become an issue for some.

"While the largest organizations will have budgets large enough to scale their cyber defenses in step with these advances, medium and small organizations may be left with weaker protection until the cybersecurity community develops defenses to counter the new attacks," said Moody's.

Read more:

Cybersecurity spending rose 70% in four years

How AI can help insurance firms with cybersecurity

Research shows that, after cybersecurity incidents, companies deploying AI-powered solutions can reduce financial losses and increase data breach response times. Those are findings that insurance carriers can certainly learn from.

The Ponemon Institute and IBM study found that firms using "AI, machine learning, automation and orchestration to augment or replace human intervention in detection and investigation of threats as well as the response and containment process" saved more and responded faster than those who did not.

Insurance companies have generally been slow to adopt new technology, but the upside of using AI and machine learning tools to mitigate the threat of data breaches may necessitate a rethink.

Read more:

AI can save millions of dollars, time in data breach response: IBM