In today’s insurance market, data reigns supreme as the digital age takes hold and more data is available, collected, and stored by insurers than ever before. While insurers and outsourced service partners navigate the complexities of customer support in the modern era, they also have the responsibility to safeguard a wealth of sensitive consumer information, from personal details to financial records.

The stakes are high, not only for outsourced providers and insurers but also for the countless policyholders who entrust them with their personal and financial data. In other words, outsourcing data security is a significant factor insurers need to take into consideration as they’re choosing between possible providers.

As you continue reading below, we will dive deeper into the importance of data security and regulatory compliance as it relates to outsourced customer support providers. We’ll discuss why safeguarding policyholder data isn’t just a legal obligation, but a crucial component of trust-building between outsourced partners and insurers.

Understanding Data Security and Compliance

Across the industry, data security and compliance with related regulations are of the utmost importance. Given the nature of insurance services, insurers tend to collect, manage, and store large volumes of sensitive policyholder data including financial information, bank details, home address, and more.

Thus, insurers take meaningful strides to safeguard policyholder data. But, with the rise of outsourced business processes throughout the industry, there can be an added layer of security risk that needs to be taken into account.

When an insurer outsources operations to a third-party provider, such as customer service, they need to do the proper due diligence beforehand. In doing so, they ensure the outsourcing company meets the adequate security standards needed to keep policyholder data safe and all practices in compliance with data security laws.

Importance of Data Security in Outsourced Support

All service providers, including those offering outsourced customer service, need to be vigilant when it comes to data security. As technology progresses and hackers’ tactics only become more advanced, it’s becoming more important for organizations to follow best data security practices as a way to avoid potentially negative outcomes.

Not only can data breaches and hacks feel intrusive and cause a hit to an organization’s reputation, but they can also cost millions of dollars and place sensitive information in the hands of criminals.

In fact, the number of victims of data breaches increased to more than 422 million in 2022, up from just around 294 million in 2021. So, this isn’t a problem that appears to be going away anytime soon. Plus, according to IBM, the average cost of a data breach in 2023 is USD 4.45 million, a 15% increase from 2020.

For these reasons, outsourced service providers need to have robust security measures in place in order to mitigate the risk of a data breach. As a result, they can help keep themselves, their client organizations, and policyholders from dealing with the adverse and costly outcomes of such events.

Compliance Regulations and Outsourced Customer Service

There are a number of data security regulations that outsourced service providers must adhere to. Below are some of the main examples:

  • General Data Protection Regulation (GDPR): A data security law enacted by the European Union in 2018, which applies to all companies located around the world that collect data on EU citizens. Some of the main points of this regulation include data minimization policies and consent for data collection, among others.
  • Health Insurance Portability Accountability Act (HIPAA): A federal US law enacted in 1996 that includes provisions to protect the privacy and security of an individual’s health information.
  • Payment Card Industry Data Security Standards (PCI DSS): This is a set of security standards that the major credit card issuers developed to help protect cardholder data. These rules are applied to any organizations that accept, store, or transmit cardholder data.

If any outsourced customer service providers are found to be non-compliant with these regulations, they could face steep penalties or fines as a result. Given the fact that these laws span various jurisdictions, it’s important for providers to understand which regulations apply to them, and make regular audits to keep their internal practices in accordance with the requirements.

Thus, in order to stay compliant with these regulations, service providers must utilize safe data handling and storage practices, which we will cover in more detail below.

Best Practices for Data Protection

To offer strong data security protections, outsourced customer service providers can follow these best practices and strategies to ensure they’re taking the proper measures to keep policyholder data safe and stay compliant with the relevant laws.

  • Encryption: Helps protect data that’s both in transit and at rest if it were to be intercepted by an unauthorized party, making it unreadable without the proper encryption keys.
  • Access controls: Strong user authentication methods like multi-factor authentication can be used to ensure only authorized personnel gain access to sensitive policyholder data; permissions can be assigned based on job roles, restricting access only to necessary employees based on their responsibilities; logging and monitoring systems can be implemented to track who accessed what data and when.
  • Regular security/compliance audits: Organizations should conduct regular vulnerability assessments to identify weaknesses in their security frameworks; regular compliance audits can ensure adherence to relevant data security regulations.
  • Employee training: All personnel of the outsourced provider should be kept up-to-date on the latest regulatory updates that are related to their duties; regular reminders of security best practices are important to help avoid the human error element that is common in many data breaches.
  • Incident response plan: No one plans for an emergency, but that doesn’t mean they don’t happen. Having a clearly laid out incident response plan will give instructions on how to handle a security incident like a data breach, and will ensure all employees understand their responsibilities during such events.
  • Data retention and destruction: Organizations should define data retention policies and procedures for the secure disposal of sensitive data that is no longer needed in accordance with data security laws.

Building Trust Through Data Security Measures

Of course, implementing robust data security measures in outsourced customer service helps providers meet regulatory obligations. But, it can also help these BPO partners build trust and loyalty with insurers and their policyholders. With so much policyholder data being stored by both outsourced providers and insurers today, the importance of data security measures should not be understated.

Any data breach or mishandling of confidential data can break the trust that policyholders have built up. This trust is not easily won, and it can erode quite quickly. However, when insurers partner with outsourced providers who demonstrate a strong commitment to data security, policyholders can feel more confident in how their data is being handled.

So, data security should not be seen just as a legal obligation for these companies to meet like many other compliance matters. Rather, having a strong philosophy on data security and taking the appropriate measures to back it up can have a positive impact on their brand reputation and policyholder loyalty.

As insurers increasingly turn to outsourcing to streamline operations and enhance efficiency, working with providers who have established a robust data security framework will help build the trust and confidence they need to operate successfully in the digital age.

Safe Customer Support Outsourcing with Covenir

Outsourcing insurance business processes like customer support is extremely common across the insurance industry today. But, the providers you choose to partner with have deep implications, not only for the type of service your policyholders will receive but also for how safe their sensitive data will remain.

We know you take the utmost care when it comes to safeguarding policyholder data, and you can expect the same level of priority and attention on data security best practices when working with Covenir.

We know that forward-thinking insurers are looking for BPO partners who not only can help them grow in today’s competitive marketplace, but also possess a deep understanding about the data security challenges that insurers face. This extra layer of insight and expertise provides insurance providers with assurance that safeguards are in place to ensure data safety of their policyholders.

Our team of skilled customer support specialists become a part of your team, offering the type of on-brand customer service your policyholders have come to expect from you. Plus, we do so without compromising data security, so you can have the confidence to partner with Covenir as you navigate the modern insurance market.

Contact us today to learn about our flawless customer support services so you can focus on growth and innovation.