As our world becomes more digital, privacy has become an increasing concern – particularly for the insurance industry. Insurance agents and advisors handle highly sensitive information on a regular basis, and the industry has become a prime target for data breaches. And while security breaches of major insurers make the headlines, smaller agencies still face the same security threats.

Concerns over privacy have led the National Association of Insurance Commissioners (NAIC) to develop the Insurance Data Security Model Law, which requires insurance agencies with 10 or more employees to take steps to bolster their security. With several states already adopting the law and the U.S. Treasury Department urging prompt action by all states to enact it within the next five years, insurance agencies should expect major changes in data security laws in the near future.

Here’s what insurance agencies need to know about new privacy measures and what tools they can use to ensure the security of client information.

What Is the Insurance Data Security Model Law?

The Model Law “seeks to establish data security standards for regulators and insurers in order to mitigate the potential damage of a data breach,” according to the NAIC.

But what does that mean in practice? Under the law, insurance agencies must maintain a comprehensive “Information Security Program” that is based on a risk assessment and includes administrative, technical and physical safeguards. Agencies must have an incident response plan in case of a cybersecurity threat and exercise due diligence in selecting third-party security service providers.

Ensuring Compliance & Client Privacy

Insurance agencies should continue monitoring the NAIC Model Law and its status within their state so that they are well prepared to meet any new standards. Regardless of the legal status in your area, agencies should consider client privacy a critical concern – because if clients don’t trust you with their valuable information, then you simply will not have clients.

While the vast majority of agencies already have security protocols in place, there are “chinks in the armor” for many. Email often poses the biggest security threat. While everyone is supposed to use secure email, there is no single secure platform, and consumers may respond to an encrypted email via regular, unsecure email. Not to mention a staggering 94% of viruses and other malware are delivered via email. Opening just one malicious email can compromise all your saved emails and files. Where you save files can also create security issues. It’s possible for hackers to access classified files saved directly on your computer.

While it may feel like the number of security threats grows every year, it’s not impossible for insurance providers to keep clients’ information secure and satisfy any new regulations. With platforms like Link by LegacyShield, agencies can protect the privacy of their clients while simultaneously gaining many valuable technological tools at the same time.

The Benefits of a Secure Digital Storage Platform

A secure virtual workspace like Link provides a safe space for advisors to communicate, collaborate and share files with their clients without fear of intrusion. Since all data on Link is stored securely and encrypted, there’s no need for email communication, eliminating the headache of encrypted email frustrations. 

In addition to meeting today’s security standards, the collaborative platform can also help advisors:

  • Build more loyal client relationships
  • Gain further insights into clients’ financial and insurance needs
  • Develop multi-generational connections

When thinking about client privacy, remember that it’s a long game. Investing in your business isn’t always about creating immediate revenue. Often, it’s about putting in place the right people, practices and protections to provide the best experience possible for your clients. By creating a secure, seamless experience for clients, your business will likely see dividends down the line.

To learn more about Link, read our blog, “Let’s Link – Collaborate With Clients in a Secure Virtual Workspace.”

Dan Pierson

Written by Dan Pierson

Dan Pierson is an insurance industry veteran, having run several insurance businesses and eventually selling a nationally recognized life insurance general agency. Dan started LegacyShield to help other insurance advisors grow their practices by focusing on the consumer experience.