Impact of Cyber-Attacks On Insurance Industry

The cyber risks have increased after the outbreak of Covid-19. One of the main reasons behind the increment in cyber attacks is that the companies had to send their employees to work from homeand it made their online data vulnerable and easier to hack. This led to cyber risks in the insurance industry as well.

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Cyber Risks During Pandemic

Usage of digital means has increased during the pandemic in order to maintain the social distance from each other. Almost every organization in the world opted the remote work and started doing business digitally. The remote working culture made the digital medium more prone to cyber-attacks. During the pandemic, the insurance companies providing cyber insurance policies have also come into the radar of cyberbullies.

Cyber attacks are one of the top global digital risks for the financial sector. The number of incidents have increased along with the impact on financial entities. As per a recent study on the cyber risk during the pandemic in the financial sector reveals the number of covid-19 related cyber-attacks has increased in the health sector. Not just this, insurance companies, credit unions, and payment institutions are some of the most affected sectors.

Insurance Companies In The Radar of Cyber Bullies

Insurance companies have always been on the radar of the cyberbullies. It is because of the amount of data they have of their customers. They have all the details about their customer’s health issues, their income, etc. which if get into the hands of these hackers then they can use all those information to blackmail them.

This makes the insurance companies more prone to cyber-attacks than any other company. Since insurance companies have started promoting online purchases and renewals to make the customer's experience smoother hence become one of the favourite targets of hackers.

Consequences Suffered by Insurers

Interruption in the business of the insurance companies is one of the biggest consequences suffered by them along with the cost of materials used for undertaking, for the third parties and policyholders. The data hacked by cyberbullies can be used in different criminal activities such as identity theft to blackmail the company for financial gains.

Apart from the financial loss, the insurance companies will have to face reputational damage that can last for a long time. Also, these attacks can result in operational issues also. Since the cyber attacks can cause interruption in the business then it will directly impact their customers.

Loss of Customers

Insurance companies hold the personal data of their customers and once that data is on loose, the companies will have to face legal consequences as it makes their customers eligible to file a case against them for not protecting their personal data.

Since insurance companies hold on to confidential data of their customers and if they get hacked, the customers lose their trust in the insurance company with their data. This results in the loss of customers in the future due to reputational damage and not being able to protect their company from cyber-attacks.

Advantage & Disadvantage of Cyber Insurance

In this digital era, having a cyber insurance policy has become a necessity. The cyber insurance policy can provide coverage for all the data lost due to cyber-attack and this is one of the advantages but the hackers cannot be trusted with the data as they can copy all that data that they can use later to blackmail the company. Also, once the reputation of the insurance company damages, it takes years to get back that goodwill and reputation in the mind of the “would-be customers”.

Everything has its advantages and disadvantages but keeping yourself ready and secure is in your hands. Companies in the service sectors have to keep themselves ready for an unexpected data breach as they are not only responsible for their company’s data but the data of their customers.

Conclusion

Cyber attacks are inevitable. Since it is impossible to stop these cyberattacks, it is better to keep yourself ready and protected by installing anti-malware so that you can protect your company’s data. Talking about the insurance companies, well they have to not only secure the data from within the company and value chain but also be prepared from any unforeseen threats.

Written By: PolicyBazaar - Updated: 16 September 2022

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