Insurance customers conduct an ever-increasing amount of their business online. As data breaches and other cybersecurity threats continue to make headlines, insurance customers are also becoming more concerned about the security of the data they share and about their privacy when transmitting potentially sensitive information online.

Insurers may benefit from thinking about data security and privacy from the customer’s perspective as well as their own. By understanding customers’ expectations about digital security and privacy, insurers can allay fears while also remaining compliant with applicable security and privacy standards.

How Do Customers Think About Security and Privacy?

Reliance on digital methods of conducting business, such as the purchase of insurance, has grown in recent years. Customers are more comfortable than ever with buying products and services online, including insurance. Yet this familiarity with digital transactions rises alongside growing concerns about data security and privacy.

An Accenture study of nearly 48,000 insurance customers found that customers are often willing to share personal data with insurers in order to receive personalized pricing and coverage. Yet they harbor doubts that insurers can adequately protect that information.

“Consumers are embracing the data-for-personalized pricing trend and want insurers to reward their efforts to improve their well-being, but it comes with a warning that trust is waning, and they want to feel in control of their data,” says Kenneth Saldhana, head of Accenture’s Insurance industry group.

It can be especially important for customers to feel in control of their data when their information may be exposed through relationships the customer never even participated in. For instance, in August 2021, T-Mobile reported a breach that exposed the personal data of nearly 50 million people — the majority of whom were prospective customers and had applied for credit, but had never actually had an account with T-Mobile.

Meanwhile, the insurance industry remains a tempting target for data theft. Because insurance companies store large amounts of personal and potentially sensitive information about their customers, it makes sense that attacks against the industry will not only continue, but increase in terms of severity and frequency.

Meeting Digital Security and Privacy Expectations

Customers’ understanding of digital security and privacy often varies according to their own background, expertise and life experience. Some customers have long experience dealing with cyber security and privacy questions, while others have little more than a sense of unease at seeing headlines about yet another data breach.

Customers may be further confused by the patchwork of privacy laws that cover various types of data in different ways and over a number of locations. The United States does not currently have a single comprehensive data privacy law; rather, legal protections for customers may depend on where they or their insurer are located.

This patchwork can leave customers confused. “Most people believe they’re protected, until they’re not. Sadly, because this [legal protection] ecosystem is hidden from view and not transparent, consumers aren’t able to see and understand the flow of information,” says technologist Ashkan Soltani, who provides research and analysis for the Federal Trade Commission and Attorneys General of California, New Jersey, Tennessee, and Ohio.

One way to better understand customers’ points of concern about digital privacy and safety is to look at the coverages customers seek for their own businesses or personal lives. Many popular cyber liability policies divide digital security and privacy risks into four broad categories: network security and privacy, network business interruption, media liability, and errors and omissions, writes Dan Burke, national cyber practice leader at insurance brokerage and consulting firm Woodruff Sawyer.

Cyber liability coverage focuses on how data breaches occur and the disruptions caused when those breaches occur. For customers, these are two vital questions as well. By helping customers understand how their data is secured and engaging them in ways to prevent breaches or mitigate their harm, insurers can boost customer confidence while also reducing risks.

Customers are unlikely to stop using digital tools to connect with their insurers. In fact, use of digital communications is likely to increase as smartphones and other digital tools become ever more common. By giving customers a sense of control over their own data security and privacy, insurers can allay fears and engage customers in preventing or mitigating data breaches.

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