ZenGRC

Simply Powerful GRC

Insurance

Risk Management Process For Insurance Companies

· ·

Insurance companies know how to protect their clients’ homes, cars, and businesses. But protecting those customers’ personal information is a bit harder to ensure.

While the insurance industry focuses on risk-based analyses for its underwriting programs, firms must also apply those same risk management processes to securing customer information.

What Are the Different Types of Risk?

It’s beneficial to categorize different risk kinds when considering them. This classification enables each risk category to be monitored by team members knowledgeable about specific subjects.

For instance, the Treadway Commission’s Committee of Sponsoring Organizations, a collaboration of industry groups that offers advice on risk management, has recommended that risk should be divided into the following four categories:

  • Financial and reporting risk, e.g., market, tax, credit
  • Compliance and governance risk, e.g., ethical, regulatory, international commerce, privacy
  • Operational risks, e.g., information and technology security and privacy, supply chain, labor issues, natural disasters
  • Strategic risks, e.g., changes in customer demand, new competitors

Categories of risks also aid in the fusion of data, as managers discuss, monitor, and modify their risk-response strategies. A structured brainstorming approach will ensure the list is comprehensive for each risk category. In addition, several tools are available to aid in visualizing and assessing possible risk events.

Examples include:

  • Threat trees for cybersecurity risk, e.g., Carnegie Mellon’s OCTAVE Allegro approach
  • Risk breakdown structures for project risks
  • Delphi exercises for investment risk

Recording the results in a risk register is the last step in the risk identification stage. The risk register offers a way to track and communicate the various hazards throughout the risk management lifecycle.

Why Is the Risk Management Process Important?

The risk management process is essential because it equips a company with the tools it needs to identify and manage possible risks. When danger is recognized, an effective risk management process can minimize negative impacts. Additionally, risk management gives a corporation a foundation to improve decision-making.

Identifying and managing risks is imperative to prepare for events that impede progress and growth. A company’s chances of success increase when it assesses its strategy for dealing with possible challenges and then creates structures to meet them.

Progressive risk management also ensures that issues with a high priority are handled aggressively. Leadership is armed with the data they need for wise decision-making to maintain profitability and manage risk exposure.

What Kinds of Protected Data Do Insurance Professionals Collect?

The National Association of Insurance Commissioners (NAIC) established a model law governing cybersecurity risks in the insurance industry.

According to a recent study from the NAIC, the core risks facing an insurance company are “underwriting, credit, market, operational, liquidity risks, etc.” The study also lists the data types that must be protected via risk management and classifies such data as “nonpublic” information.

Types of Protected Data

  • Social Security number
  • Driver’s license number or non-driver ID number
  • Account number, credit card, or debit card number
  • Security code, access code, or password that enables a consumer to access an account at a financial institution
  • Biometric records
  • Information obtained from a healthcare provider regarding a customer’s or customer’s family members’ physical, mental, or behavioral health or condition
  • Information obtained from a healthcare provider regarding care provided to the customer
  • Information obtained from a healthcare provider about payment for the provided care
  • Any business information that can materially affect a business adversely

In short, almost all the information that helps an insurance company determine the premium for a consumer’s insurance policy is nonpublic and should be protected.

NAIC Best Practices for Risk Assessment

A risk assessment assesses all the potential risks to your organization’s ability to do business. These include project management risks, operational risks, enterprise risks, inherent risks, and control risks.

For insurance companies, this should be nothing new; the goal of any insurance underwriter is to properly assess risk by applying actuarial science to assign a monetary value required to insure against that risk appropriately.

They must not, however, make the mistake of believing that risk management is only valid where their customers are concerned. Insurers must protect themselves as well.

Insurers collect various personal data that cybercriminals can leverage to commit fraud and other crimes. Thus, proper risk assessment and management are extremely important for this industry.

The NAIC has listed five steps to perform an adequate risk assessment.

Step 1: Designate a Risk Manager

The risk manager can be an employee, several employees, or a vendor responsible for the overarching information security program.

Step 2: Identify Reasonably Foreseeable Internal and External Threats

These threats arise from potential unauthorized access, transmission, disclosure, misuse, alteration, or destruction of protected information. Moreover, the hazards identified need to incorporate those from internal systems or third-party service providers.

Step 3: Assess the Likelihood and Estimate Damage

Considering the private nature of the information that insurance companies collect, they must assess the likelihood that cybercriminals will target the company’s databases and estimate the potential impact of the risks.

Step 4: Review Current Policies, Procedures, Systems, and Safeguards

Determine how well the current controls protect data; this provides insight into additional cybersecurity needs. Insurance companies must consider all aspects of their controls when reviewing information systems. They must first check and assess network and software designs to do this.

They also need to assess the risks posed by their current information classification, governance, processing, storage, transmission, and disposal procedures. Moreover, they need to understand how well their current detection, protection, and response processes secure the information from attacks, intrusions, and system failures.

Finally, they must ensure continuous, relevant training for employees and managers.

Step 5: Implement Procedures and Safeguards

Once you identify shortcomings in your cybersecurity controls, implement mitigation measures as necessary to reduce the risk to whatever tolerance has been defined by your board.

Beyond that, remember: the effectiveness of cybersecurity controls will change as insurance companies incorporate new technologies, and cybercriminals develop their threat methodologies. So insurance firms should re-perform their risk assessment annually to ensure continued effectiveness of risk controls.

How Does Risk Management Differ From Risk Assessment?

The risk assessment measures various risks and helps an insurance company define the most significant ones. Enterprise risk management (ERM) for insurance companies means monitoring and updating controls for mitigated or accepted risks, as well as making a decision to transfer risk via cyber insurance.

Risk Management Process Steps for Insurance Professionals

Insurance firms face cybersecurity regulations at the state and national level, plus extensive security expectations from the banks that work with insurance firms. Adding more complications, state-level security regulations may be mostly similar, but not identical, across all jurisdictions.

When insurance companies and claims adjusters properly manage risk, it gives them an advantage, not only by providing loss control against costly data breaches. It also protects insurance brokers from compliance violations and enhances their credibility with clients looking for insurance products that can protect the things most precious to them.

The NAIC sets out five steps to risk management for insurance companies.

Step 1: Design an Information Security Program

An information security program should be appropriate for the insurance professional’s size and complexity. As part of the enterprise risk management approach, a company may choose to mitigate or transfer the risks to a vendor. However, if the company outsources services, it must ensure that the outsourcing partner also protects sensitive information.

Step 2: Choose Appropriate Security Controls

Similar to other prescriptive standards, the NAIC offers a series of controls that can help guide actuaries. The 11 rules used by risk analysts are:

  • Create authentication and access controls
  • Identify critical data, personnel, devices, information technology (IT) systems, and facilities.
  • Restrict physical access
  • Incorporate at-rest and in-transit encryption
  • Adopt secure software development practices
  • Modify the information systems to maintain compliance with the security program
  • Incorporate controls, such as multi-factor authentication, for access
  • Test and monitor systems and procedures regularly.
  • Create audit trails to detect and respond to cybersecurity events that enable the reconstruction of material financial transactions
  • Implement measures to protect against destruction, loss, or damage from natural disasters, fire, water damage, or technological failures
  • Create secure disposal and records retention procedures

Step 3: Cybersecurity in ERM

Although the NAIC appears to create an ERM-based approach to cybersecurity, the model law specifies that the enterprise risk management process should incorporate information security.

Step 4: Stay Informed

This risk management procedure focuses on sharing information about emerging threats and vulnerabilities. As part of continuous monitoring, insurance companies should be aware of new threat vectors. To inform internal and external stakeholders, they must establish clear communication procedures.

Step 5: Cybersecurity Training

The model law focuses on both initial training and continued, updated training to reflect new risks to the data ecosystem and environment. Repeating the “stay informed” procedure highlights the importance of employee cyber awareness.

Risk Assessment vs. Risk Analysis

Sorting through the various risk-related concepts, such as risk assessment and risk management, may get complicated. However, the most significant distinction is in the breadth of coverage. The risk management plan is the general framework, including both risk analysis and risk assessment.

Risk assessments are used to identify all possible risks, categorize them, and determine the appropriate risk treatment.

A risk analysis is part of the risk assessment process where you estimate the probability of and potential impact of each identified risk. This helps with risk categorization and prioritization.

Simplify the Risk Management Process with ZenGRC

With the amount of personal information collected by insurance companies, cybersecurity risk analysis should be a top priority to protect consumer data.

Traditional tools like shared calendars, spreadsheets, and emails to track tasks and discussions take time that could be better spent monitoring cybersecurity. Maintaining an effective information security program requires efficient workflows to coordinate communication and task management across internal stakeholders.

This is true for all insurance players: financial services, life insurance, health insurance, or property and casualty insurance services.

ZenGRC provides insurance compliance software with workflow tagging that allows you to prioritize tasks. As a result, everyone knows what to do and when to do it, so you aren’t manually chasing down answers.

It’s a turnkey solution with built-in content for multiple risk management frameworks, enabling you to start your first risk assessments in minutes. Automated audit trails document remediation activities to prove that you maintained data confidentiality, integrity, and availability as required by law.

Schedule a demo today for more information about how ZenGRC can streamline your risk management strategy.

Choosing the Best Insurance Compliance Software for Your Business

· ·

Compared to most other business sectors, the insurance industry is tightly regulated — and for many good reasons. Most people rarely interact with their insurance company until something happens: a fire, a wreck, or perhaps a complicated healthcare situation.


Insurance professionals already know that competition in the insurance industry is cutthroat, so customer interaction has to be swift and uncomplicated, without time-consuming duplicated forms and other trappings that block the customer from reaching his or her goal: a settlement payout.  Meanwhile, insurance firms amass huge troves of sensitive data about their customers: financial information, healthcare data, employment histories, and much more. 


To protect the privacy of clients and regulate how insurance providers may (or most likely, may not) share consumer information, the insurance industry is heavily regulated. Federal agencies like the Center for Medicare & Medicaid Services (CMS)  issues strict regulations for health insurance providers, to which compliance is essential. To make things even more complicated, insurance companies are also regulated by individual states — and regulations can vary from state to state, making it all somewhat confusing. The National Association of Insurance Commissioners (NAIC) does set many model standards that apply across state lines, but staying in compliance with the many different regulatory entities can feel overwhelming. 


On top of that, insurance companies have to comply with cybersecurity rules and regulations to protect sensitive information against data breaches and hacking. If your insurance business also has to comply with the Health Insurance Portability and Accountability Act (HIPAA) regulatory compliance takes on another level of scrutiny both internally and externally. Non-compliance even for brief moments can lead to costly remediation work.  


For those who work with HR and employee benefits, complying with healthcare insurance regulations for employees is important, yet also complicated. It requires lots of staff time, especially during onboarding of new employees, and a sophisticated management system to ensure that each employee is covered by the correct healthcare plan. Companies also have to confirm that the healthcare plans they offer meet legal requirements in multiple jurisdictions, since state and federal regulators have a say in how insurance should work.


Modern insurance compliance software simplifies those challenges and smooths the path to achieving regulatory compliance. Using automation and artificial intelligence (AI) compliance management software will streamline the insurance compliance process while protecting sensitive information at the same time.

Benefits of Compliance Management Software for Insurance Companies

Compliance management software offers a multitude of benefits for insurance companies, which operate in a highly regulated industry where adherence to legal and regulatory standards is not just obligatory but critical for continued operation and trust. Here are some key benefits:

  1. Enhanced Regulatory Compliance: Insurance companies face an ever-evolving landscape of regulations. Compliance management software helps in staying up-to-date with these changes, ensuring that the company adheres to current laws and regulations. It can track regulatory updates and automatically notify relevant personnel, ensuring timely compliance.
  2. Risk Mitigation: These systems allow for proactive risk assessment and management by identifying potential compliance risks and providing tools to mitigate them. This reduces the likelihood of regulatory penalties, legal issues, and reputational damage.
  3. Efficiency and Accuracy: Automating compliance tasks with software reduces the burden of manual processes and minimizes the risk of human error. This leads to more efficient operation and accurate compliance reporting, saving time and resources.
  4. Centralized Control and Visibility: Compliance management software provides a centralized platform for tracking and managing all compliance-related activities. This enhances visibility into the company’s compliance status, making it easier to identify and address issues promptly.
  5. Improved Decision-Making: With comprehensive data and analytics tools, these systems offer insightful reports and dashboards that aid in informed decision-making. Insurance companies can use this data to strategize and make better business decisions aligned with compliance requirements.
  6. Streamlined Audits: The software simplifies the audit process by maintaining organized records of compliance data, policies, and procedures. This makes it easier to provide necessary documentation during audits, reducing the time and effort involved.
  7. Enhanced Security and Data Protection: Given the sensitive nature of data handled by insurance companies, compliance software often includes robust security features to protect against data breaches and ensure the confidentiality of client information, in line with industry standards like HIPAA.
  8. Cost Savings: By streamlining compliance processes and reducing the need for extensive manual labor, these systems can lead to significant cost savings. Additionally, by avoiding non-compliance penalties and reducing the risk of litigation, companies can save substantial amounts.
  9. Building Consumer Trust: In the insurance industry, trust is paramount. Demonstrating a strong commitment to compliance reassures customers and partners that the company is responsible and trustworthy.
  10. Customization and Scalability: Many compliance management systems offer customization to suit specific needs and are scalable as the company grows. This flexibility ensures that the software continues to meet the evolving needs of the insurance company.

In conclusion, compliance management software is an invaluable asset for insurance companies, helping them navigate the complex regulatory environment efficiently while supporting overall business strategy and growth.

Why compliance matters to the bottomline 

For insurance companies and other businesses, staying in regulatory compliance is not just a legal necessity but a crucial factor influencing the bottom line. Non-compliance can lead to substantial financial penalties, legal repercussions, and damage to reputation.


HIPAA (Health Insurance Portability and Accountability Act) violations exemplify the severity of non-compliance costs. The HIPAA Journal outlines four tiers of HIPAA violations, with penalties escalating based on the level of negligence and willful neglect:

  • Tier 1 (Lack of Knowledge): The minimum penalty per violation is $137, with a maximum of $34,464 per violation. The annual penalty limit for violations of this nature is also $34,464.
  • Tier 2 (Lack of Oversight): The minimum fine per violation is $1,379, and the maximum is $68,928. The annual limit for these violations can reach up to $137,886.
  • Tier 3 (Willful Neglect Addressed within 30 Days): The penalties range from a minimum of $13,785 to a maximum of $68,928 per violation. The cap for annual penalties in this tier is $344,638.
  • Tier 4 (Willful Neglect Not Addressed within 30 Days): In this most severe tier, both the minimum and maximum per-violation penalty is $68,928, with an annual penalty limit reaching up to $2,067,813.

It’s important to note that these fines can be substantial, reflecting the serious nature of HIPAA compliance and the emphasis on protecting patient health information. Also, the actual penalty imposed within these ranges depends on several factors, including the covered entity’s past compliance history, the nature and extent of the harm resulting from the violation, and the entity’s cooperation during the investigation.


Beyond HIPAA, other regulatory bodies impose hefty fines for non-compliance. OSHA (Occupational Safety and Health Administration) can levy tens of thousands of dollars per incident, potentially leading to temporary business or construction site shutdowns and significant project losses. Similarly, violations of the Affordable Care Act (ACA) and Fair Housing Act can incur thousands of dollars in fines, with the latter starting at $16,000 for a first violation and increasing exponentially for subsequent infractions within a seven-year period.


Traditional manual compliance systems, often reliant on spreadsheets and shared drives, are cumbersome and inefficient. These paper-based systems can significantly drain the time and resources of compliance teams and risk management staff. In contrast, modern compliance software solutions offer a more efficient approach, enabling quick and easy access to critical information. With the ability to generate necessary compliance data at the click of a button, these systems not only save time but also reduce the risk of non-compliance, thereby protecting the financial health and reputation of the organization.

In summary, the impact of non-compliance on a business’s bottom line is profound, encompassing not just monetary penalties but also operational disruptions and reputational damage. Investing in efficient compliance management tools is essential for mitigating these risks and ensuring financial stability.

Things to keep in mind when choosing a good insurance compliance solution 

When selecting a suitable insurance compliance solution, there are several key factors to consider to ensure the software meets your organization’s specific needs:

  1. Ease of Installation and Configuration: Modern insurance compliance solutions are typically designed for high functionality with flexibility and configurability. This makes installation straightforward. Look for a solution that can be easily tailored to align with your company’s unique processes and requirements.
  2. Built-in Templates and Customization: Choose software that offers built-in templates, which can simplify the process of configuring the system to match your business processes and industry specifics. These templates can serve as a helpful starting point, reducing the time and effort required to set up the system.
  3. Comprehensive Onboarding and Training: A good compliance solution should offer full-service onboarding for your staff. This includes detailed instruction, which can be delivered through various formats like webinars or interactive online sessions. Effective training ensures that your team can fully leverage the software’s capabilities.
  4. Self-Service Functionality: Ideal compliance software will include self-service options for common queries. This feature allows employees to independently find answers to frequent HR and insurance questions, enhancing efficiency and reducing the workload on your HR or compliance department.
  5. Regulatory Updates and Compliance Management: The solution should be capable of adapting to regulatory changes. It should offer features for tracking and managing compliance tasks, ensuring that your organization stays up-to-date with the latest regulations and compliance requirements.
  6. Robust Security and Data Protection: Given the sensitivity of insurance data, ensure that the software provides robust security measures to protect against data breaches and ensure the confidentiality and integrity of your data.
  7. Integration Capabilities: The software should easily integrate with your existing systems and workflows. Seamless integration helps in maintaining data consistency and streamlines processes across different business functions.
  8. Scalability and Flexibility: As your business grows, your compliance needs may change. Opt for a solution that is scalable and can adapt to the evolving needs of your organization.
  9. User-Friendly Interface: A user-friendly interface is crucial for ensuring that the software is accessible and easy to use for all employees, regardless of their technical expertise.
  10. Customer Support and Service: Good customer support is essential for addressing any issues or questions that arise. Check for the availability of responsive and knowledgeable customer support services.

By keeping these factors in mind, you can choose an insurance compliance solution that not only aligns with your current needs but also supports your organization’s growth and adapts to future challenges.

Top features to look for in insurance compliance software

When choosing insurance compliance software, it’s crucial to look for features that streamline the compliance process and adapt to the constantly evolving regulatory landscape.

Key features to consider include incident and complaint management, regulatory intelligence tracking, ease of use and setup, customizable features to suit your team structure, policy management, workflow tracking, real-time progress monitoring, notifications, and robust reporting and analytics for compliance reports. Cost and budget alignment, along with strong customer service and support, are also important factors to consider.


Some essential features to look for in insurance compliance software include:

  • Incident and Complaint Management: Efficient handling and tracking of incidents and complaints.
  • Regulatory Intelligence Tracking: Keeping up-to-date with changing regulations and laws.
  • User-Friendly Interface: Easy to use and set up, enhancing user adoption.
  • Customizability: Features that can be tailored to fit your organization’s specific needs.
  • Policy Management: Tools for creating, managing, and disseminating policies.
  • Workflow Tracking: Monitoring progress and managing tasks in real-time.
  • Alerts and Notifications: Keeping relevant staff informed of critical updates or tasks.
  • Reporting and Analytics: Generating insightful compliance reports and data analysis.
  • Cost-Effectiveness: Offering value within your budget constraints.
  • Customer Support: Reliable and accessible customer service for troubleshooting and assistance.

What are the top-rated insurance compliance software solutions for 2024?

Some of the top-rated insurance compliance software solutions for 2024 include MyCOI, TrustLayer, Hearsay, AuditBoard, Account Ability, accessiBe, and Deque. These software solutions offer a range of functionalities such as Certificate of Insurance (COI) tracking, risk management, automated insurance verification, client engagement, policy management, ADA compliance features, and digital accessibility tools. They help enhance data security, maintain audit trails, generate accurate compliance reports, and foster a culture of transparency and accountability

ZenGRC Has Compliance Solutions for Insurance Companies

ZenGRC offers comprehensive compliance solutions tailored for insurance companies, providing a streamlined and effective approach to managing regulatory requirements. Its features include automated workflows, robust reporting tools, and real-time compliance monitoring, simplifying the complexity of compliance management.

ZenGRC’s user-friendly interface and customizable dashboards offer insurance companies a clear view of their compliance status, enhancing decision-making and risk management. The platform’s ability to adapt to regulatory changes ensures that insurance firms remain compliant with evolving industry standards, making ZenGRC a valuable tool for maintaining a strong compliance posture in the dynamic insurance sector.

Cyber Insurance 101: 5 Things Senior Management Needs to Know

· ·

Cybercriminals constantly find new ways to circumvent corporate defenses, and just about every business falls victim to an attack sooner or later. Hence cyber insurance has become a lucrative product for insurance companies to offer — and a must-have for businesses to offset the costs of attack-inflicted damage.

What Is Cyber Insurance and Why Do You Need It?

Cyber insurance is insurance specifically designed to cover expenses or losses that might result from a data breach. This could include the cost of legal fees or data recovery, reputational damage, or loss of income due to business disruptions. Extortion via ransomware attacks is also often covered under such policies. Most standard business insurance policies don’t cover cyber risks, so adding cyber insurance is an increasingly attractive option for many companies.
The cost of cyber insurance can vary depending upon several factors, such as the size of your company, the amount of data you transmit or store, and whether you’ve experienced a breach in the past. Although the price can be steep, the cost of a data breach is usually even higher, making cyber insurance a worthwhile consideration for your business.

What You Need To Know About Cyber Insurance

All companies have digital transactions, which means that all companies are potentially at risk for a breach. A cyber insurance policy can provide peace of mind for your investors, customers, and staff. Here are five things you need to know to choose a viable cyber insurance policy.

1. There are seven types of liability coverage

To make the right decision about coverage, your company needs to focus on its most significant risks. The Center for Insurance and Policy Research lists seven types of cyber liability coverage:

  1. Liability costs for security or privacy breaches, which would include losing customer information by allowing unauthorized access to computer systems.
  2. Costs associated with cleaning up after a cyber incident, including consumer notification, customer support, and the fees of providing credit monitoring services to affected consumers.
  3. Costs associated with restoring, updating, or replacing business assets stored electronically.
  4. Business interruption costs and extra expenses related to a security or privacy breach.
  5. Liability costs associated with libel, slander, copyright infringement, product disparagement, or reputational damage to others when the allegations involve a business website, social media, or print media.
  6. Expenses related to cyber extortion (that is, ransomware payments).
  7. Coverage for expenses related to regulatory compliance for billing errors, physician self-referral proceedings, and Emergency Medical Treatment and Active Labor Act proceedings.

Such policies can help protect the company from the costs associated with a security breach, but first an organization should first look at its IT compliance program and controls to understand the types of disruption it might face. Understanding the potential liabilities in the event of a breach can help determine the best return on investment for cyber insurance coverage.

2. Cyber insurance does not cover all events

Cyber insurance is an evolving field of coverage. Insurance companies still need to determine how to best design their policies to protect themselves from unintended payouts. Emergent risks are often unquantifiable, so those purchasing cyber insurance must review their policies carefully.
Your organization needs to understand not just what is covered, but also what is excluded. For example, cyberterrorism is one common exclusion. It’s important to note that while cyber extortion and malware are common coverages, these definitions may evolve or overlap in the years to come. Also, expect litigation and court rulings to clarify this currently murky landscape.
For organizations trying to maximize their investment in cyber insurance, understanding the specific risks associated with the business becomes more important. Cyber attacks not only cause damage to the infiltrated business; they also often affect the organization’s customers thanks to the interconnectedness of modern business. So when deciding on an insurance provider, your company should confirm that all third-party liability issues are covered.

3. The internet of things and cyber insurance

Businesses increasingly depend on smart devices and other technology connected to the internet, collectively known as the “Internet of Things” (IoT). The sheer volume of potential entry points incorporated into most businesses via IoT can also affect your insurance needs. IoT cyber threats could result in more than just traditional data loss. For example, bodily damage is a part of most traditional property insurance policies. While you may not expect it, an IoT vulnerability can contribute to this harm.
For example, a healthcare facility with an IoT device breach could seriously harm patients. Your cyber risk insurance, however, might not cover this kind of damage. You can negotiate limitations on the coverage, but first your company needs to understand what your insurance profile looks like across coverage lines.
Your organization must also determine whether coverage incorporates an appropriate loss scenario. This means that before negotiating and purchasing a policy, you should model the potential losses an IoT attack might cause. This ensures that deductibles and self-insured expenses make sense for your risk profile.

4. Cyber insurance does not absolve a company of its responsibilities

The most significant issues in cybersecurity remain those resulting from human error. Criminals often prey upon a company’s employees, tricking them into sharing data. These can be links, videos, or pictures shared in emails or social media. In addition, phishing scams can trick employees by looking like a trusted resource while infecting workstations with malware or ransomware.
Cyber insurance coverage can help protect against monetary losses from data breaches, against libel arising out of a breach, and against business interruption — but insurance can’t protect against employee mistakes; prevention is still an essential step in minimizing risk.

5. Information security compliance can help cyber insurance outcomes

As the cyber insurance market matures, underwriters are getting better at pricing potential losses. If your organization wants to obtain the best premiums for a cyber insurance policy, having robust cyber compliance and third-party risk management programs is one step you can take to reduce your insurance costs.
Also remember that strong controls can help support a filed claim. Insurance companies will first investigate whether the organization was negligent, which would cancel coverage. Since negligence in these areas is currently ambiguous, your company’s compliance stance will help prove your cybersecurity efforts, so you can obtain better claims outcomes if you ever need to file.

What Does a Cyber Insurance Policy Cover?

Typically, cyber insurance includes five categories of protection to safeguard your business from these key risks.

1. Network protection

Network security coverage is crucial for most businesses, especially those with information and privacy risks. This coverage protects your company in case of a breakdown in network security, such as a data breach, malware infection, cyber-extortion demand, ransomware, or compromised corporate emails.
First-party expenditures (that is, those you directly incur due to the cyber event) are covered under network security coverage. These costs include:

  • Law-related costs
  • Forensic IT
  • Negotiation of a ransomware demand and its payment
  • Data recovery
  • Consumer breach notification
  • Establishing a call center
  • Knowing public relations
  • Identity restoration and credit monitoring

2. Data breach liability

Breach liability coverage (sometimes known as privacy liability coverage) is also crucial for most businesses, particularly those with information or privacy risk. Sensitive information about customers and leaks or violations that reveal such data jeopardize the security of the people affected and put your company at risk of a lawsuit.
Privacy liability coverage shields your business from liabilities if a cyber incident or privacy law violation occurs. These expenses may result from weaknesses necessary to fulfill a contractual commitment or governmental and law enforcement regulatory inquiries.

3. Business interruption on the network

How much of your business’s operations depend on technology? Network business interruption coverage offers a solution for companies exposed to operational cyber risks.
You can recover lost earnings, fixed expenditures, and additional costs spent during the period your business was disrupted when your network or the network of your service provider goes down due to an event.
This involves damage due to flaws in security, such as a third-party hack, or system failures, including unsuccessful software patches and human error.

4. Media responsibility

This offers protection against intellectual property infringement caused by the promotion of your services, except patent infringement. It frequently applies to printed and internet advertising, including social media posts.

5. Errors and omissions (E&O)

E&O coverage protects against lawsuits brought about by mistakes made while delivering your services or by their non-performance.
This can include professional services usually delivered by attorneys, surgeons, architects, and engineers and technology-related services such as software and consultancy.
Should this happen, E&O coverage covers claims of carelessness or contract violation. It may also cover the expense of indemnification or legal defense in case of a lawsuit or customer disagreement.

Key Components of Cyber Insurance Coverage

Any cyber insurance policy has two components:

  1. First-party cyber liability insurance. This covers the expenses of investigating and responding to a cyber event, along with the financial repercussions on the organization’s business operations.
  2. Third-party cyber liability insurance. This component provides indemnity to the organization for claims others might file against you for the breach you suffered. (For example, customers suing you for losing their data in a breach.)

First-party coverage

Let’s explore the key components that make first-party insurance important.

  • Forensic investigations. After a cyber onslaught, reputable cybersecurity vendors lead the charge with thorough forensic investigations. Identifying and categorizing the attack, they assess the damage, cleanse affected systems, and restore endpoints. These critical support services contain the attack, minimize damage, and facilitate a comprehensive recovery plan.
  • Legal counsel. The aftermath of a breach triggers complex legal requirements that may vary across borders, so first-party policies often provide access to experienced legal counsel. These legal stalwarts outline the precise steps organizations must take to meet their legal obligations following a cyber incident, assuring compliance.
  • Notifications. Organizations shoulder the burden of identifying and notifying affected parties about potential risks to personal information. From customer Social Security numbers to employee data such as addresses, bank details, credit card numbers, driver’s license information, and health records; all must be safeguarded. Swift notification to relevant authorities and government agencies, with the necessary documentation, is essential.
  • Victim credit monitoring. Certain states require organizations to cover the costs of credit monitoring or provide assistance in restoring identities for affected individuals. A lifeline for victims, this aspect of a cyber insurance policy eases the distress caused by data breaches.
  • Cyber extortion. To combat the threat of ransomware attacks, robust cyber insurance policies include protection against ransomware attacks. Equipped with support services and dedicated funds, policyholders can mount a defense and regain control over their networks, data, and other valuable assets.
  • Data recovery, business interruption, and loss of revenue. Following major cyberattacks, businesses often grapple with severe disruptions to critical operations, customer services, and data loss. Consequently, revenue takes a substantial hit. Cyber policies provide organizations with tools to calculate lost revenues and offset financial blows during the affected period. The policies also support data recovery and asset restoration costs, paving a smoother path to normalcy.
  • Reputational harm. When a breach tarnishes an organization’s reputation, many organizations must engage in extensive marketing and public relations efforts to rebuild that reputation. A robust cyber insurance policy covering the costs of these reputation-building activities and aiding in the arduous journey toward restoration.

Third-party coverage

Third-party cyber insurance encompasses several vital areas of protection:

  • Network security and privacy liability. Covers losses incurred by clients, customers, partners, or vendors due to errors, omissions, or negligence by the insured during a cyber event.
  • Regulatory liability. Provides coverage for legal expenses to defend against enforcement actions from privacy regulators.
  • PCI fines. Protects against fines and penalties issued by the Payment Card Industry Data Security Standard (PCI DSS).
  • Media liability. Offers coverage against defamation, libel, slander, intellectual property theft, and copyright infringement.

What Are the Requirements for Cyber Insurance?

Most insurance carriers do a cyber risk assessment as part of their underwriting to determine your premium, policy limitations, and whether you even qualify for cyber insurance in the first place. Depending on the size of your business, this procedure might range from a questionnaire to a thorough investigation performed for several weeks by a cybersecurity firm. Insurance carriers might also perform new risk assessments over time to ensure their pricing is accurate.
Policyholders must adhere to fundamental IT security requirements to be eligible for cyber insurance. At the least, the following security measures must be in place for a business interested in purchasing cyber insurance:

  • Antivirus software is installed on every PC and kept up to date.
  • A firewall secures the enterprise network.
  • Regular company data backups are performed on secure cloud services or external media.
  • A secure provisioning method must be followed when granting user access rights and permissions.

Use ZenGRC to Enhance Your Cybersecurity

If you’re unsure whether insurance is the right choice for your business, there are other unified risk management measures you can explore.
ZenGRC is a unified software platform that provides your company with continuous monitoring and precise management of your entire risk management landscape. By centralizing and streamlining your risk management and mitigation, ZenGRC can help you identify data breaches before they can harm your company and your clients. Armed with these insights, you can inform your decisions about cyber insurance.
Schedule a demo today to learn more about how ZenGRC can help you save money by creating a risk management program that works for you.

Role of Compliance Officer in the Insurance Industry

· ·

The current trend in information security insurance company conversations focus on cybersecurity policies, but the compliance officers in the insurance compliance officer also oversees the company’s information security stance. As more information becomes digitized, the data insurance companies collect to set premiums, collect payments, and pay claims increasingly pose data security risks.

Insurance Compliance Officer Role & Responsibilities

What Information do Insurers collect?

The term “insurance” covers a wide array of products. Healthcare, auto, home, life, and general liability services are only the very tip of the proverbial iceberg. These various insurance products collect a variety of personal information that insurers must collect which implicates a variety of information security compliance requirements.

For example, healthcare insurance providers must maintain Health Insurance Portability and Accessibility Act (HIPAA) compliance. Meanwhile, home and life insurance products collect information like birth dates, social security numbers, and account details.

However, the data collected from customers only touches upon a small amount of the information that insurance companies need to protect. An insurance company payroll department needs to maintain Payment Card Industry Data Security Standard (PCI DSS) compliance to pay employees while a claims department may be paying an accident victim through a payment vendor.

What Threats Currently Affect the Insurance Industry?

In November 2017, Accenture outlined the current threats facing the insurance industry. Among the alarming statistics were the following:

  • The typical insurance company faces an average of 113 targeted breach attempts per year.
  • Only 79% of cybersecurity executives at large insurance companies felt confident in their strategies
  • 61% of insurers noted they took months to detect successful breaches
  • 34% of insurers said they had proper cyber incident response protocols
  • Internal security teams only discover 66% of successful breaches.

These problematic numbers show a hypocritical disconnect between insurers and their cyber insurance insureds. Based on this information, most insurers likely wouldn’t insure their own companies, at least not for a reasonable premium.

What Threats Affect Mid-sized Insurance Companies?

Theoretically, the threats facing mid-market insurance companies are the same as their larger brethren. Realistically, these companies lack resources available to their larger business competitors because they have less money to spend on security.

According to an Arctic Wolf report, 72% of mid-market IT professionals felt their roles incorporated too many different areas leading to an inability to focus on security. In addition, 50% of the individuals who responded the security was too complex and 51% felt that they needed more resources.
Large insurance companies manage large IT departments. They also have an entire compliance department, not just a single compliance officer.

What Types of Risk Management Options Enable Insurance Companies?

Information security risk management means identifying, understanding, assessing, and mitigating risks. Typically, companies follow five deceivingly “simple” steps as part of the risk management process.

  1. Catalog data assets

    Before beginning any risk management process, you need to identify the types of information that you collect and store. In some cases, the information poses a high financial risk to your company. This information includes personal information such as name, birth date, social security number, account information, or IP addresses.

  2. Identify data storage and transmission systems, networks, and applications

    Not only does your insurance company collect information, but it stores and shares it in a variety of ways. You may be using a cloud storage solution to enable backup and recovery. Perhaps you use a shared cloud drive to allow access across internal stakeholders. You may also run a web-based platform that allows your customers to review their account information. Some information may be stored on local devices while other information is stored off-premises.

  3. Identify threats to the information, systems, networks, and applications

    Threats to your information, systems, networks, and applications can be internal or external. Internally, an employee might accidentally (or maliciously) alter information. You also need to review the external threats to your systems and networks.

    If you’re using a web-based application you need to ensure the appropriate encryption and mitigate web-based attacks like SQL injections and cross-site scripting. Additionally, malicious actors increasing insert malware and ransomware into browsers and systems to hold information hostage.

  4. Establish controls to protect the integrity, accessibility, and confidentiality of information

    Establishing controls means putting features in place to help protect information. Once you’ve considered all the ways that someone can compromise your data environment, you need to put up walls that keep intruders out.

    For example, to protect data from an internal compromise, you need to focus on user access using role-based authentication. For external threats, you need to ensure appropriate firewall configurations, encryption methods, and endpoint security.

  5. Monitor the controls’ effectiveness

    Threats to your data environment evolve continuously. As companies incorporate new protections, malicious actors find new ways to exploit them. A control that protects you today may not protect you tomorrow. To ensure not only security but compliance as well, companies need to focus on monitoring their environment all the time, not just during a once-per-year audit.

How ZenGRC Enables Continuous Compliance in the Insurance Industry

Insurance companies suffer from the burden of providing a variety of services that collect a myriad of data. Customer information and employee information need to be stored with equal security, but underwriting and payroll may never speak to one another.

Moreover, different lines of coverage require different information and may use different vendors as part of their business operations. Enabling a single source for data collection and communication allows insurance compliance officers to more efficiently monitor their cybersecurity posture.
ZenGRC’s System-of-Record makes collecting audit information easy. By streamlining the workflow, organizations can eliminate emails while tracing outstanding tasks.

Additionally, the unified control management feature allows organizations to map controls across multiple frameworks, standards, and regulations to determine whether compliance gaps exist. This mapping capability enables organizations to ensure consistency that leads to stronger audit outcomes.
For example, as part of the System-of-Record dashboard, organizations have at-a-glance insight into the percentage of controls finalized and a portion of controls mapped to a particular framework.

ZenGRC’s streamlined workflow shows task managers the date on which a vendor provided a response and a status. These details mean that compliance managers no longer need to spend time following up with the organization’s multitudinous vendors.

GRC automation enables organizations to focus on the fundamental issues of compliance while eliminating the tedious tasks that often make compliance feel like a burden. Not only does this help compliance officers feel more effective at their jobs, it also makes organizations more efficient at the ongoing task of governance and continuous monitoring.

For more information about how ZenGRC can streamline your GRC process, contact us for a demo today.