With cyber threats becoming more sophisticated every day, protecting sensitive customer data has taken center stage, especially within the core software that runs the insurance business. Insurers are stepping up their game when it comes to cybersecurity in insurance software, and it’s exciting to see how they’re doing it!
Many insurtechs are at the forefront of this transformation, integrating cutting-edge technologies like AI-powered threat detection systems and automating security processes. They’re not just reacting to threats; they’re taking proactive steps to mitigate risks before they become problems for insurers.
The Imperative for Cybersecurity in Insurance
P&C Insurance companies are treasure troves of sensitive data — personal and financial — making them irresistible targets for cybercriminals. As insurers modernize their operations with technologies like cloud computing, artificial intelligence (AI), and the Internet of Things (IoT), they’re unlocking incredible efficiencies but also exposing themselves to new vulnerabilities.
The global cost of cybercrime is projected to reach a staggering $13.82 trillion annually by 2028 [Cybersecurity Ventures]
For insurers, this means investing heavily in cybersecurity measures isn’t just about avoiding fines; it’s about survival in an increasingly hostile digital landscape.
Before we get into the tech, let’s talk about a real-world example that shook the insurance world — the Folksam data breach in Sweden. It was a wake-up call for insurers everywhere. Back in 2020, Folksam, one of Sweden’s largest insurers, accidentally leaked sensitive data belonging to about one million customers. The breach wasn’t caused by hackers but by an internal oversight. Folksam shared private customer information with major tech companies like Facebook, Google, Microsoft, LinkedIn, and Adobe as part of an effort to analyze customer behavior and offer personalized services
.While Folksam claimed there was no evidence that the data was misused by third parties, the incident sparked serious concerns among customers and regulators alike. The incident highlighted how even well-intentioned actions can lead to catastrophic breaches if proper safeguards aren’t in place.
Insurance Core Platform Security: A Matter of When, Not If
Your core platform – the system that handles policy administration, claims processing, billing, and customer management – is the engine that drives your P&C insurance business. But it's also a prime target for cyberattacks if it's not properly secured.
AI: Your Always-On Security Co-Pilot
Leading insurers are now embedding AI-driven Security Operations Center (SOC) "co-pilots" into their core platforms. These AI tools analyze massive amounts of data to:
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Detect Anomalies: Machine learning models can identify unusual patterns in claims, underwriting, or policy modifications that might indicate fraud or a breach. This could include aspects like a sudden spike in claims from a particular region or an unusual number of requests to change policy details.
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Automate Incident Response: When a threat is detected, AI can automatically isolate affected systems, preventing the attack from spreading further. This could involve shutting down compromised servers or disabling user accounts.
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Predict Attack Vectors: By analyzing threat intelligence feeds and dark web data, AI can help insurers anticipate future attacks and proactively strengthen their defenses. This could involve identifying new malware strains or uncovering vulnerabilities in third-party software.
Think of Zurich Insurance, whose AI models flagged a credential-stuffing attack aimed at its Asian SME clients, blocking thousands of fraudulent login attempts within hours. That level of responsiveness is only possible when AI is deeply integrated into the core platform.
Zero Trust Architecture: Verifying Everything, Trusting Nothing
Insider threats, whether malicious employees or simply careless ones, are a huge concern for P&C insurers. Think about it: employees have access to sensitive customer data, financial records, and proprietary information. If an employee with access to claims data clicks on a phishing link, that can open the whole system up to attack. Traditionally, insurers would often grant broad access rights to employees, making it easier for things to go wrong.
The Zero Trust security architecture model is gaining traction in the P&C insurance world, and the key components of a Zero Trust architecture include:
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Multi-Factor Authentication (MFA): Requiring all users to verify their identity using multiple factors, such as passwords, biometrics, or hardware tokens that generate unique, time-sensitive codes. Even a combination of all three can be used for adjusters to access sensitive policy data.
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Microsegmentation: Dividing the core platform into smaller, isolated segments to limit the blast radius of a potential breach. This ensures that if one part of the system is compromised, the attacker can't easily move laterally to other parts of the network.
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Behavioral Analytics: Continuously monitoring user activity within the core platform and flagging any deviations from normal patterns. This can help detect compromised accounts or malicious insiders who are attempting to steal or tamper with data.
Allianz slashed insider threat incidents by 40% by using Microsoft Entra ID to tightly control who could access what within their core systems. It's like giving each employee a keycard that unlocks only the doors they need to access, limiting both accidental and malicious data breaches. The result is a much smaller attack surface.
Also Read: How Cutting-Edge Analytics is Fortifying Insurers and Protecting Policyholders
Cloud-Native Security: Securing Data in the Cloud
As more P&C insurers migrate their core platforms to the cloud, securing these cloud environments is becoming a top priority. This involves implementing cloud-native security measures, such as:
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Cloud Access Security Brokers (CASBs): They monitor activity within the cloud environment and detect misconfigured settings or unauthorized access attempts.
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AI-Enhanced DDoS Protection: Protecting against distributed denial-of-service (DDoS) attacks that can disrupt online services.
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Immutable Backups: Ensuring that critical data can be recovered even in the event of a ransomware attack.
Progressive Insurance, for example, uses Cloudflare-powered systems to absorb DDoS attacks on its online claims portal, ensuring that customers can always access the services they need.
Navigating the Regulatory Minefield: Automated Compliance to the Rescue
Let’s be frank - keeping up with the ever-changing regulatory landscape is a constant headache for US-based P&C insurers. From state-specific data privacy laws to industry regulations, the compliance burden is immense. Failing to comply can lead to hefty fines, lawsuits, and reputational damage. The good news? Technology is stepping in to ease the pain.
P&C insurers are increasingly turning to core platforms with automated compliance engines to streamline their regulatory obligations. These tools use AI to dynamically map policy wordings to current regulations, instantly flagging any potential conflicts. Imagine a system that automatically reviews every policy to ensure it aligns with the latest requirements – that’s the power of these engines.
And it's not just about avoiding penalties. These tools are also saving insurers significant time and resources. One telling statistic: 78% of insurers are now using automated tools to handle NYSDFS’s (New York State Department of Financial Services) 2024 AI underwriting rules, allowing them to avoid an estimated $2.3 million+ in potential fines! That’s a clear indication of the value these engines provide.
Quantum-Resistant Cryptography: Protecting Data from Coming Threats
Here's a scenario to keep you up at night: quantum computers are coming, and when they arrive, they'll have the power to crack almost all of the encryption we rely on today. Think of it as a master key that unlocks all the digital vaults we thought were secure. That’s why forward-thinking insurers are starting to integrate quantum-resistant cryptography into their core platforms right now, to be ahead of the game.
What does this mean for a P&C insurer? It means adopting new algorithms that are mathematically resistant to attacks from quantum computers, ensuring that sensitive data remains confidential even in a post-quantum world. Munich Re, for example, is actively piloting lattice-based algorithms to protect its actuarial models and client datasets against future attacks using Shor's algorithm (the quantum algorithm that can break RSA and ECC).
In today's threat landscape, a reactive approach to cybersecurity in insurance is simply not enough. P&C insurers need to proactively build security into the core platforms that run their businesses. It's time to make sure your core platform is a fortress. Talk with the SimpleSolve team about the security features built into their SimpleINSPIRE core insurance platform.
Topics: Data Security
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