Data Security Remains Huge Issue For Financial Services

A recent survey by Deloitte found that cybersecurity is the No. 1 concern of financial services companies. Firms across the industry are making data security a top spending priority.

Given the stakes, it only makes sense that LIMRA/LOMA would get involved and take a leadership role on data protection. Paul Henry, client relationship director for LIMRA/LOMA, has been working on a fraud prevention program for several months.

"Fraudsters tend to be opportunistic and every time you read about a hack into somebody's database, it probably means there’s going to be a new set of fraudsters taking that information and going out and trying to find a way in," he explained. "What we are seeing is that the industry is doing a really good job putting defenses in place."

In an effort to forge a coordinated strategy against fraud networks, LIMRA hosted its first Fraud Symposium in October during its annual conference. Since then, 10 companies have signed on to the effort to create a fraud-prevention prototype, Henry said.

Today's 2019 Life Insurance Conference agenda includes a session on identifying and avoiding fraud. Henry, who is doing a separate presentation for the 2019 Retirement Industry Conference, which begins later today, said the 10 companies are enough for the association to move forward with "beta testing" on its fraud-prevention program.

"Getting compliance and legal professionals on the same page isn’t necessarily the easiest thing," he added. "We probably have another two dozen companies who have said to us, ‘When it’s ready, we want to sign up.’"

Two-thirds of respondents (67 percent) to the Deloitte survey named cybersecurity as one of the three risks that would most increase in importance for their business over the next two years, far more than for any other risk. Yet, only about half of the respondents felt their institutions were extremely or very effective in managing this risk.

When a data breach occurs, the stakes are high. For example, fraud costs to consumers from account takeover is estimated at $5 billion.

Cybersecurity regulations are likely to increase in the future, analysts have said. That is just another reason for the industry to tackle the problem on its own as much as it can, Henry said.

Customers might have to assume some responsibility as well, he said.

"I foresee more financial services asking their customers to take preventative steps of their own," Henry said. "Right now, it’s the institutions who are doing all the heavy lifting. I wouldn’t be surprised if companies were to ask the customers to take more proactive steps to take care of themselves."

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].

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