Many systems actually warn the user it is not wise to send information this way and actually disclaim responsibility for any loss as a result, but do not offer an alternative secure way to send the information.
I find it worrying that businesses see this risk and warn people about it but nonetheless are effectively encouraging them to do it anyway. If those building the services recognise the risk, rather the warning about it, why not fix it?
Usually these services are provided by an outsourced third-party supplier, but invariably they will carry the insurer’s brand.
Such a supplier may be able to get away with this because they are not FCA-regulated, but is encouraging risky behaviour responsible?
Thinking about an individual’s obligations under the senior managers and certification regime, could whoever signed this off at an insurer face very difficult questions from the FCA?
There are also significant potential brand reputation risks to consider; we do not need stories in the consumer media about ‘my insurance company’s app lost my sensitive data’.
Such issues do appear something of a problem with insurers. I am aware of a health insurer who also collects extensive data from customers, but again does not supply a secure mechanism for its transmission.
There is no question that providing additional benefits to complement protection products is having a very positive impact with consumers. The more they engage with their insurers via these services the more they will value their policies.
That said, there is an urgent need for the protection industry to do more to digitise. The FCA’s recent feedback statement 21/7 on open finance makes it clear that there will be a regulatory requirement for businesses to supply data in line with the open banking consent model, by supplying data to a range of trusted third-party services.
Advice businesses can deliver such trusted third-party services as part of the way they present holistic financial advice.
To truly address the protection gap, we need to persuade consumers that the policies they hold are just as valuable to their everyday lives as the coffee they buy or their on-demand media. Providing information is crucial to achieving this.
Ian McKenna is founder of FTRC and AdviserSoftware.com