Data breaches top list of concerns for insurance industry

Data-breaches-top-list-of-concerns-for-insurance-industry

Data security a costly threat whilst employers ride the risk of a rise in tribunals – BLM publishes Q1 2018 Broker Pulse

Ahead of the imminent arrival of General Data Protection Regulation (‘GDPR’), brokers across the UK have identified data breaches as the single largest threat to insurers and their clients. Findings from the 2018 Q1 Broker Pulse survey, published by insurance and risk law firm BLM, found that almost nine in 10 (88 per cent) of brokers saw data breaches as a key risk to their customers in 2018.

The quarterly poll, considered a barometer for insurance trends in the UK, also identified that increasing awareness of data security across the board was the biggest concern for businesses ahead of the GDPR deadline next month.

Helen Devery, BLM partner and head of the firm’s broker sector, commented: “The proliferation of customer data has been a growing threat for some time now and it’s fair to say the prospect of GDPR being in place will be sending concerns to businesses large and small.

“Having recently seen Under Armour and its MyFitnessPal app users subjected to the third largest data breach in history, these findings back the view that data security poses an unparalleled financial risk for businesses in the digital age. Indeed, whilst the investigation into Cambridge Analytica’s use of Facebook data will encourage more prudent data sharing in future, this is a real time issue, and businesses are facing greater pressures than ever before to keep their customers’ data safe.”

Another issue expected to present itself in the next 12 months is an increase in employment tribunal claims following the Supreme Court’s decision to remove fees associated with making a claim. Despite it being anticipated that the number of claims will more than double in 2018, the Q1 Broker Pulse found that only five per cent of businesses involved had reviewed their practices in light of the ruling.

Helen Devery added: “The removal of fees related to employment tribunals has certainly opened the door to the potential for more spurious and fraudulent claims being made. There currently appears to be very little political will to introduce any alternative fee system so the industry will be watching with a close eye to see how the numbers change as we approach the first-year anniversary.”

The Q1 Broker Pulse also found that the Far East remained a major problem for insurers pursuing the recovery of damages relating to defective products. A report commissioned by the International Trademark Association (INTA) and the International Chamber of Commerce, said the global economic value of counterfeiting and piracy could reach $2.3 trillion by 2022 – a figure backed in the UK, with 80 per cent of brokers telling BLM that defective products from the Far East were still an issue.

“The results of the Broker Pulse provide an important reflection of some of today’s most pertinent issues across the world of insurance, from the growing significance of securing digital assets, to managing threats around fraudulent claims and ensuring that global supply chains are adequately protected. While GDPR preparation has lingered long on every business’s priority list”, Devery finished, “the consequences of non-compliance should be enough to ensure that no stone is left unturned in protecting against loss.”