Understanding Cybersecurity Threats in Insurance Payment System
Organisations in the insurance industry, manage a vast amount of financial transactions, handling everything from policy payments to collections and refunds. These transactions contain sensitive customer information, including personal and financial data, making them attractive targets for cybercriminals.
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In 2023, the Australian Signals Directorate (ASD) addressed over 1,100 cybersecurity incidents involving Australian entities, as per the Cyber Threat Report. Additionally, law enforcement received approximately 94,000 reports through ReportCyber, averaging to about one report every 6 minutes.
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Insurance companies are exposed to diverse cyber threats such as data breaches, phishing attacks, and payment fraud. These threats create significant risks to both the companies and their customers. The popularity of spamming and malicious attempts to deceive people has led a reassessment of how we handle personal and payment information.
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In this article, we will learn the top five cyber security threats surrounding payments and collections in the insurance industry – the conversations often left unspoken. Why? Because the truth remains: organisations all too often fall short in proactively exploring solutions and applying preventive measures at the earliest opportunity.
Cyber Threat #1 - Insider Threats
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Insider threats involve malicious or negligent actions by employees, contractors, or partners who have access to the company's systems and data. These insiders may intentionally sabotage systems, steal sensitive information, or inadvertently compromise security through careless actions such as clicking on phishing links.
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Based on the 2022 Insider Threat Global Report by the Ponemon Institute, which analyzed 278 organisations, it was found that 26% of incidents were attributed to criminal insiders. These incidents incurred a total cost of $4.1 million over a year.
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Organisations must implement rigorous access controls to mitigate insider threats, regularly monitor user activity for suspicious behaviour, and conduct comprehensive employee training on cybersecurity’s best practices and the importance of securing sensitive data.
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Building a culture of security awareness and accountability among employees serves as a significant defence against insider threats, strengthening the overall resilience of digital payment systems. Establishing clear policies and procedures for reporting suspicious activities can facilitate early detection and response to potential insider threats.
Cyber Threat #2 - Third-Party Payment Processors Risks
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Many organisations rely on third-party payment processors to manage transactions, but this reliance comes with added cybersecurity risks. These processors often operate with less stringent security standards compared to the companies themselves, which could expose customer payment data to breaches or unauthorised access.
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The interconnected nature of these third-party payment processors can amplify the impact of a cyberattack. A breach in one processor could have ripple effects, affecting multiple companies that use the same service provider. This interconnectedness increases the scale and severity of the incident, increasing their vulnerability. It emphasises the critical need for robust cybersecurity measures throughout the entire payment processing ecosystem to avoid such risks effectively.
Cyber Threat #3 - Data Sovereignty and Compliance
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Organisations navigating digital payment systems hosted by third-party providers or cloud services encounter issues regarding compliance with the Payment Card Industry Data Security Standard (PCI DSS) and Australian data protection laws.
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Data sovereignty dictates that data is subject to the country's regulations, causing a significant concern when third-party providers store data on servers outside Australia.
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This situation raises intricate compliance issues, as insurance companies must ensure that their data, including sensitive customer payment information, remains protected and compliant with both PCI DSS and Australian regulations. Failure to comply could lead to severe legal consequences and undermine customer trust in the security of digital payment systems.
According to the 2020 Cost of a Data Breach Report by IBM Security, the average total cost of a data breach worldwide was $3.86 million. Non-compliance with PCI DSS could significantly contribute to these costs, considering that data breaches often result from security vulnerabilities that non-compliance intensifies.
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By proactively addressing data sovereignty and compliance concerns, insurance companies can maintain the reliability and trustworthiness of their digital payment systems and maintain customer confidence in the security of their transactions.
Cyber Threat #4 - Social Engineering Targeting Customers
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Cybercriminals frequently use social engineering tactics, such as phishing or pretexting, to trick customers into giving sensitive information or making unauthorised payments. To counter this risk, organisations must prioritise educating their customers about these tactics while implementing measures to detect and prevent social engineering attacks effectively.
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Organisations must start to recognise the consequences of cybercriminals exploiting human vulnerabilities through social engineering. Tactics like phishing emails or fraudulent phone calls can easily deceive customers into compromising their sensitive information or unknowingly transferring funds to malicious actors. Insurance companies should also invest in educating their customers on how to stay vigilant. They must increase awareness of common ploys and offer guidance on how to recognise and respond to suspicious communications.
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Implementing authentication mechanisms, such as two-factor authentication, significantly increases the security of digital payment processes. These additional layers of authentication substantially decrease the likelihood of successful social engineering attacks by adding an extra layer for malicious actors to bypass.
Cyber Threat #5 - Legacy Systems Vulnerabilities
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Legacy systems within insurance companies, which may not have been designed with modern cybersecurity practices in mind, can pose significant risks. These systems may lack adequate security features and are more susceptible to exploitation by cyber threats.
Organisations must prioritise modernisation efforts and invest in upgrading outdated technology to align with current cybersecurity standards. This may involve implementing patches and updates to address known vulnerabilities, as well as phasing out obsolete systems in favour of more secure alternatives.
Conducting regular security assessments and penetration testing can help identify and remediate vulnerabilities in legacy systems, enhancing the overall resilience of digital payment processes.
Conclusion
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In conclusion, the cybersecurity landscape surrounding utility payments is complex and continuously evolving. Organisations face numerous threats, from insider risks to vulnerabilities in legacy systems, all of which can compromise the security of customer data and financial transactions. Despite these challenges, it's crucial for insurance companies to proactively explore solutions and implement preventive measures to avoid these risks effectively.
Ultimately, protecting customer data and ensuring the security of financial transactions should be a top priority for maintaining trust and confidence. With a proactive approach and the right cybersecurity measures in place, organisations can navigate these challenges and uphold the reputation of their digital payment processes, ensuring a safer and more secure experience for all stakeholders involved.
References
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In 2023, the Australian Signals Directorate (ASD) addressed over 1,100 cybersecurity incidents involving Australian entities, as per the Cyber Threat Report. Additionally, law enforcement received approximately 94,000 reports through ReportCyber, averaging to about one report every 6 minutes.
-
Based on the 2022 Insider Threat Global Report by the Ponemon Institute, which analyzed 278 organisations, it was found that 26% of incidents were attributed to criminal insiders. These incidents incurred a total cost of $4.1 million over a year.
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According to the 2020 Cost of a Data Breach Report by IBM Security, the average total cost of a data breach worldwide was $3.86 million. Non-compliance with PCI DSS could significantly contribute to these costs, considering that data breaches often result from security vulnerabilities that non-compliance exacerbates.
Turn Challenges into Opportunities with Customer Centrics
Customer Centrics is committed to staying ahead of the needs of our clients and their customers, exposing any notion that cyber threats and attacks are unlikely incidents. We’ve developed an end-to-end solution for organisations seeking to modernise their digital payment systems and avoid these cyber threats.
By reimagining payments as part of a holistic customer journey, organisations can achieve significant improvements, such as reducing Days Sales Outstanding (DSO) by up to 30% and cutting costs by as much as 60%.
With Customer Centrics, organisations can streamline processes, enhance customer experiences, and drive sustainable growth, all while safeguarding against cyber threats, upholding PCI DSS compliance, and ensuring scalability.
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