December 22, 2014 | Written by: Wyatt Urmey
Categorized: Risk & Analytics
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I’m sure I am not the only one going line-by-line through my credit card statements when they arrive this time of year. I’m looking for that $8.29 charge from somewhere that looks innocuous and routine, but reveals I have a breach. And, trends seem to show similar levels of fastidiousness are required now around security and fraud at an organizational level – or it can be catastrophic for businesses.
While fraud and security do present risks that require our attention, there are also substantial opportunities to turn customers’ increased appetite and interest in more security and identity protection into customer loyalty and increased profits. Insurance, after all, is an industry known for providing peace of mind and so this mindshare could be translated into a natural evolution for providing additional security features, support and certified protections.
For insurance, a natural line extension could be taking the ‘we protect your home, car, family,’ to the next level as ‘we also protect you and your data.’ In the era of cloud, where people ‘trust’ more of their data assets to organizations outside their home, this could be an area to really consider for insurance and loss – like renters insurance for your data assets where insurance does the subletting.
In order to take on such advanced capabilities, insurance must first make sure its own infrastructure is locked tight and also build the internal capital to consider the product extension. One specific area for consideration on where to start saving returns us to the premise of safety and protection – controlling “leakage” or fraud mitigation. In fact, in a survey last year, indicated 50% of P&C insurers expected fraud to grow, which will subtract substantially from the bottom line unless insurers are investing now to protect themselves.
Relatively small investments today can prevent big costs later [what business model does this sound like? Hint: Insurance]. Many of the headline stealing cyber-security issues started with a single email, or a single thumb drive. For insurance in particular, identifying and sifting for consistency to ferret out the fraudulent claims using Big Data and analytics can save millions for insurance companies; millions that can be applied to new features, protections and customer assurances that their financial information is safe and protected. The added benefit is that protecting your own brand also builds credibility to offer clients more secure services than competitors. And, customers win because reductions in false claims mean lower adjudication times and lower costs for legitimate claims, which ultimately translates to lower premiums and better customer satisfaction scores.
Along similar lines, RIMAC Insurance of Peru is already taking an industry leading role and spoke for over 20 minutes on the Cube about their own transformation at the fall Insight2014 event. This is a great case study to watch on how to evolve a brand.
Security goes beyond Counter Fraud to being able to sense potential danger before it becomes a real issue. And, as we have had two holiday seasons where there have been prominent news-grabbing headlines on major brands around security, it’s a good time to explore the topic. It isn’t just happening where we hear about it, as 90% of companies claim they have been hacked. So why is it becoming a seemingly bigger issue now? We can venture a guess. I had a mentor explain to me that at the root level there is a kind of Moore’s law for security, that vulnerability is proportional to features and capabilities – as one expands so does the other. Now that we have more ways of entering a network than ever before, and more devices requiring it, security has become naturally a bigger deal for companies. It also stands to reason that it will get more important every year as technology advances. Therefore, it may be as important to sense danger proactively before it arrives at our infrastructure’s virtual doorstep, as well as knowing how to prepare for more diverse and creative hacking beyond bot armies and denial of service. It is important to build security intelligence now, because insurance has a brand that is underpinned by reducing risk, it is more important to our industry to be ahead of the crowd – and the headlines — on security.