Insurtech or insurance technology is a rapidly growing sector in India. Cybersecurity is crucial for safeguarding customer data as Insurtech combines digital technologies and data-driven solutions to streamline insurance services. Though InsurTech and fintech firms offer new-age financial services solutions, they also introduce unique cybersecurity risks.
Imagine an insurtech firm that offers digital insurance policies through its website and mobile applications. Customers use their application to purchase a policy, access personal information, and place a claim. Since they handle sensitive information and financial data, they must comply with cybersecurity requirements to protect customer privacy. The best way to stay protected against cybersecurity risk is to have cybersecurity coverage.
Here are some of the important cybersecurity measures insurtechs should implement to protect customer data within their ecosystem:
Data Encryption
- Data encryption ensures all customers’ sensitive data such as personal details, financial information, and payment details is scrambled and unreadable without a key, preventing unauthorised access. This is crucial for safeguarding customer data in real-time transactions.
- Tokenisation also helps to prevent cyber-attacks by making it harder for hackers to extract meaningful information even if they breach security systems.
Advanced authentication and identity systems
- Multi-factor authentication (MFA), one-time passwords, and biometric authentication (using facial recognition and fingerprints) are becoming essential security layers in fintech solutions. Implementation of multi-factor authentication usage for employees and customers in fintech ensures sensitive information remains accessible for authorised users.
- Identity and access management (IAM) systems provide a structured way to monitor and control access to data. This system ensures compliance with regulatory requirements and reduces the risk of insider threats.
Artificial intelligence-enabled response
- Automated response systems can help block suspicious activities, alert the appropriate teams on suspected threats, and ensure minimal impact on business operations.
- Using an artificial intelligence-enabled threat response system can help Insurtech companies detect unusual patterns in customer behaviour. Such suspicious behaviours may signal a security breach, such as malware infiltration or fraudulent activity. This proactive threat detection helps to neutralise risks before they escalate.
Compliance with regulatory standards
- The Insurance Regulatory and Development Authority of India (IRDAI) has established guidelines that Insurtech firms must follow to secure customer data. These include the implementation of strong security protocols and regular audits. This will help them fix vulnerabilities before the hacker exploits them.
- Compliance with India’s Personal Data Protection Bill and with global standards like the General Data Protection Regulation (GDPR) is also crucial to ensure data privacy is upheld. Proactive approaches and compliance with regulatory standards ensure firms are not vulnerable to legal penalties.
Blockchain for data integrity
- Blockchain technology ensures data integrity by using a decentralised and immutable ledger. Once information is recorded in a blockchain, it becomes nearly impossible to alter, making it an excellent tool for fraud prevention and secure data storage in Insurtech.
- Blockchain enhances transparency, tamper-proof data storage, and reduces disputes and fraud.
Cybersecurity insurance
- Sensitive data handling and digital operation make it mandatory for insurtech companies to have adequate cybersecurity coverage. Cybersecurity in FinTech includes threats like ransomware, data breaches, and phishing attacks, which can lead to expensive business interruptions and reputational damage. Having cybersecurity insurance coverage ensures firms have financial protection against the potential risk in case of a data breach or cyberattack.
- The policy provides coverage for legal fees, response costs, regulatory fines, and more. With growing regulatory demands and rising cyber threats, cybersecurity insurance has become an essential risk management tool in the insurtech industry.
Customer education and awareness
- Customer education on cybersecurity is vital in insurtech, as it empowers users to protect their sensitive information and reduce risks. Educating customers on basic cybersecurity practices such as the usage of strong passwords, recognising phishing attempts, or using multi-factor authentication should be part of their cybersecurity measures. Clear guidance from insurtechs can help reduce the likelihood of breaches from the user’s side.
- Insurtech companies increasingly provide resources and tips on safe online behaviour with their regular notifications and emails.
Conclusion
To conclude, the rising trend of new-age technologies combined with innovative insurance solutions in India is helping Insurtech companies enhance security by integrating advanced technologies. This includes data encryption, blockchain for data integrity, AI-powered threat detection, and more. However, insurtech firms must continuously evolve their cybersecurity strategies to meet the growing and changing risks in the sector. Compliance with regulatory frameworks like IRDAI guidelines and the Personal Data Protection Bill and protecting the business with adequate cyber insurance cover further strengthen the cyber security posture of Insurtech players in India.
