In Focus Risk
GDPR readiness: moving forward together
It is over a year since European Union rules on data protection came into force, but many companies are still lagging behind
Dr Mahmood Hussain Shah School of Strategy and Leadership, Coventry University
Insurance companies deal with large amounts of personal and sensitive data from different sources which is mainly linked to or belongs to their clients. In fact, data is key to companies operating in the insurance industry. Despite that the General Data Protection
Regulation (GDPR) was introduced in May 2018, insurance companies are still struggling with many issues associated with data privacy compliance. The high volume of data insurance
companies hold, along with its variety, velocity and veracity makes the act compliance difficult for these companies.
A double-edge sword of data The GDPR introduced both new types of opportunities as well as threats to the insurance industry. The emphasise on data privacy and
security led to an increasing demand of for cyber-insurance policies in Europe. Cyber insurance which covers the losses
relating to damage to, or loss of information from IT systems and networks is already well-established in some parts of the world such as the United States. However, it has been rapidly increasing
in Europe too after the introduction of the GDPR. In addition, like other industries, companies in this industry are more likely to satisfy their clients when their data is kept safe. On the other hand, the introduction of this act had a major effect on the way
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Dr Nisreen Ameen School of Business and Management, Royal Holloway, University of London
companies in the insurance industry operate and handle sensitive data. Failure to comply with the GDPR can result in negative consequences for companies in the insurance industry as they can be subject to fines of up to €20m or 4% of the total annual global turnover (whichever is greater) and reputational risk. In addition, customers are empowered to
bring private claims against these companies when their data privacy is infringed.
GDPR readiness Despite of the fact that the GDPR was introduced last year, a recent study conducted by Consultancy UK in 2019 showed that 30% of European businesses still not GDPR compliant yet, despite that they agree that the act has led to a better management of customer data and made businesses feel safer from cybercrimes. Major insurance companies operating
in the UK declared that they are still not completely ready to handle all the GDPR requirements as it is a complex process. This can be associated with many factors
including data controllers issues, third parties handling different types of data, the complexity of the process of handling data, sharing data with other companies and competitors. In addition, consent management is an
issue as consent can no longer be implied, it must be freely given, specific, informed, unambiguous, clear affirmative, and no imbalance of power must exist.
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Dr Ali Tarhini College of Economics & Political Science, Sultan Qaboos University
AI is used by insurance companies to detect fraud and enhance customer experience, but can also be a security risk as it extracts data, examines it, and passes it on to the insurer so data can leak at any stage
In addition, the introduction of new and
advanced technologies such as artificial intelligence (AI) can bring both benefits and challenges for these companies in terms of data privacy and security. AI is used by insurance companies to
detect fraud and enhance customer experience, but can also be a security risk as it extracts data, examines it, and passes it on to the insurer so data can leak at any stage. Furthermore, while insurance companies
in the UK are attempting to comply with the GDPR with all its challenges, the Brexit forms another challenge. After the UK leaves the European Union (EU), dealing with companies outside the
January 2020
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