You can’t pick up a newspaper or watch the evening news these days without hearing of another cyber attack against businesses and individuals. Just ask Sony how damaging these attacks can be to repair.
We live in a dangerous world where criminals or foreign governments can steal personal data using sophisticated malware and technology to bypass security measures. Sensitive personal data is being copied and transferred to embarrass and inflect financial harm. Data breeches can be especially damaging to associations that offer financial products like credit cards and insurance to their members. How likely are members to renew their membership if their personal information is stolen?
Increased competition has forced insurance companies and financial institutions to seek ways to reduce their operating costs. Many companies have opted to outsource certain customer service functions offshore as a way to reduce costs. Some insurance broker administrators who specialize in selling insurance to association members use outsourcing as a way to reduce operating expenses and improve profit margins. Since wages and employee benefit-related costs are generally their largest operating expense, they can reduce their full-time staff by outsourcing work to foreign countries where labor costs are much lower.
While association broker administrators may save money by outsourcing, are they putting your members’ personal data at risk? Was having your members’ insurance serviced by subcontractors in India or the Philippines something you contracted and approved? Is your members’ sensitive personal information being electronically transferred to foreign countries? Are the appropriate security protocols in place to protect you from a damaging identity theft situation?
Does your contract with your insurance broker administrator require your prior written consent before any service-related function is outsourced offshore? If not, it should.
While not all offshore outsourcing situations pose added data security risks, isn’t this a discussion you should have with your broker administrator? Their answer will help you make an informed decision on how your members’ customer service and personal data is safeguarded.
Dennis Mulligan is director of business development at USI Affinity.