Mitigating areas of weakness to prevent wrongful acts
Sir Isaac Newton once remarked that, “If I have seen further, it is by standing on the shoulders of giants”. This is similar to Winston Churchill’s expression that, “the further back you look, the further forward you are likely to see”.
When we take this and apply it to the South African context in terms of fraud committed in the industry, it points to the fact that past circumstances must be sought out to identify the challenges in order to move forward and better the industry effectively.
Fraud seems to be having a significant impact on the industry and with brokers constantly handling large amounts of confidential client information, FAnews chatted to Candice Sutherland, Business Development Consultant (Corporate Solutions) at SHA Specialist Underwriters about how brokers can litigate areas of weaknesses.
Risk of exposure
According to a report released at the 35th annual Crime Stoppers International (CSI) Conference held at the end of 2014, identity theft occurs every 79 seconds worldwide. Therefore, now more than ever, it is imperative that all personal information is permanently kept safe and secure in order to ensure that clients are protected.
The collection and processing of information seems to be a growing concern in the industry. Clients are willing to fully disclose information relating to a claim, and brokers are fulfilling their duty of passing this information onto insurers.
Sutherland however, mentioned that while many brokers are very careful when handling sensitive and confidential information, criminals are becoming smarter and are willing to do anything to get their hands on personal information that will assist them with their illegal activities.
“By gaining access to clients’ personal information, criminals are able to see detailed home content lists, vehicle registration details, expensive jewellery valuations, security system details and other confidential personal information. It is with this that more homes are at risk of being broken into. According to the South African Crime Statistics released by the South African Police Service (SAPS), there was a 7.4% rise in home burglaries between April 2013 and March 2014,” said Sutherland.
According to Sutherland, the biggest area of vulnerability has been the IT systems that are used by brokers. “In the past year, we have seen countless IT systems falling victim to hacking. As brokers issue and maintain insurance policies, often on their own IT systems, they need to ensure that these systems are well protected against criminal activity,” she continued.
She further noted that, as the custodian of a client, employee or company’s information a broker has a legal obligation to keep information safe. Risks that brokers might face could be a simple situation like their laptop being stolen from their vehicle whilst meeting with a client or misplacing a file after doing a gap analysis/financial needs analysis for a client.
Being vigilant
In the fight against crime, vigilance remains any broker’s first port of call when it comes to managing their risk of exposure to crime.
“We live in an ever changing world where criminals are always ten steps ahead. The time it takes to appoint regulators and establish legislation works to our detriment, all whilst professional syndicates of criminals are running rampant. Our mindset also needs to change though as many brokers feel that there are much too many new regulations to comply with and business is becoming too onerous,” she said.
South Africa’s Protection of Personal Information Act (POPI), which was implemented in 2014, seeks to regulate the processing and collecting of personal information. First and foremost, Sutherland mentions that to meet some of the critical elements of the POPI Act brokers must understand what the piece of legislation entails. Staff should be fully cognisant of the obligations they face as well as the penalties involved. A number of companies in South Africa have taken it one step further and employed a Compliance Officer to ensure everyone in the company conforms.
“It is the responsibility of all brokers to ensure that they comply with all regulations set out to reduce any potential risks that could lead to the leaking of confidential information. It is essential that the client is confident that he or she is dealing with a broker who will store all his or her information in an environment that is guaranteed to protect his or her privacy,” she said.
A step in the right direction
Sutherland believes that brokers can take a few steps in order to eliminate risks. They can
ensure that their systems are run by competent IT professionals, on company networks that have adequate security protection. Brokers can implement auto-locks and antiviruses on all cellphones and tablets and enforce effective passwords. They can also learn how to remote wipe devices, whilst being aggressive when updating and patching information. And lastly, if not mostly importantly, brokers should safeguard themselves with Cyber Insurance policies.
“We live in a world where we cannot escape technology. It can be your best friend and your worst enemy. There are numerous companies and programs that can assist brokers in managing the entire process. A good starting point would be having a penetration test of the systems done as this will show brokers exactly how weak or how strong their systems are,” she said.
Nonetheless, brokers need to educate clients accordingly. “It is important to discuss the dangers of living online – many South Africans are completely unaware of the risks and threats we all face. Brokers should inform clients not to click on links in emails or open attachments from people they do not know. If you have a good relationship with your client and they receive a suspicious email from you or your brokerage, there is a level of comfortability to call you (for example for changed bank details),” concludes Sutherland.
Editor’s Thoughts:
As a broker you are responsible for people’s personal information, so even if an incident like this happens to you, all eyes will be on you and not the perpetrator. With crime being increasingly prevalent in South Africa, the necessary steps should be taken to avoid the harsh rulings and penalties of legislation. If not for that, take the necessary steps to protect yourself and your clients. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
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