Data protection and customer retention

Reports of data loss and security breaches are frequently in the news. Over the past couple of years there have been stories of mislaid laptops and hackers getting hold of transactional data. In this regard, the insurance sector is no exception: in May this year, US health insurance provider Aetna contacted 65,000 current and former employees whose Social Security numbers were at risk of theft by hackers following a data breach on its job application website; life insurance provider Aviva USA recently announced that a data breach caused by malware on an Aviva computer had affected 550 customers who opened accounts in the US, making Social Security numbers and other personal information vulnerable; and Blue Cross Blue Shield of Louisiana, another US health insurance firm, compromised the personal data of around 1,700 brokers via an email exposing information such as Social Security numbers, phone numbers and addresses, when a document containing the data was accidentally attached to a general email notifying brokers of a software upgrade. According to Christine Andrews, Director, Data Quality Management Group Limited (DQM), insurance firms are holding increasing volumes of customer data, which is vital for sales activity, marketing campaigns, customer service and transactional processes. However, Ms Andrews points out that most financial services organisations do not know how to keep this data secure. A recent report by PricewaterhouseCoopers revealed that over half of financial services firms do not know where all their customer and employee data is stored.

With a recession in full swing data security should be a top priority for insurance companies. Organisations that do not protect personal data can face real, damaging consequences – bad publicity, law suits, fines, reputational damage, and consequent customer defections if a data breach occurs. With businesses anxious to retain customers or acquire new ones marketers could turn to desperate measures in these financially difficult times. The most recent of DQM Group’s annual studies into the abuse of commercially available data revealed a fresh increase in the misuse of marketing lists in 2008 following a major improvement between 2006 and 2007.