How SOC 2 reporting can protect insurance customers

The Australian insurance sector is a multibillion-dollar industry that is entrusted with private data from millions of Australians. Companies that work in insurance or that engage with Insurtech in particular have become high-risk targets in the sector, with more customer data now being stored in cloud-based applications than in previous years.

With increasing amounts of data now available to insurance companies, the need for system and organisational controls (SOC) reporting is also growing and is now more important than ever.

Why the SOC 2 standard is the new standard to mark against for Insurtech

The SOC 2 reporting standard (SOC 2 Type II report) is based on the trust principles of security, availability, integrity of processing, confidentiality, and privacy, and is an audit opinion report over internal controls as they relate to IT. [1]

While it’s often referred to as a certification, it is more an audit of a company’s service-oriented controls to ensure they meet the SOC trust principles relating to IT. The compliance report generated as a result of such an audit, and which can either take the form of a highly technical SOC 2 report or a more user-friendly SOC 3 report, details the controls that are in place to meet those trust principles.

Though the SOC 2 standard doesn’t directly dictate these controls, the purpose of the report is to demonstrate that a company has controls in place, identify them, and validate that the controls were correctly implemented during the observation period.

SOC 2 compliance means that an organisation has developed and is implementing very strict controls, policies, and procedures to protect customer information. With growing concerns around data security, it’s now more important than ever for customers to be assured that their confidential data is secure, safe, and maintains its integrity.

While it’s important that customers understand that an organisation is SOC 2 Type II-compliant, it’s more important for them to recognise that the organisation’s security controls comply with the customer’s requirements to engage with this organisation.

What you need to look for in a SOC 2-compliant Insurtech provider

Annual SOC 2 audits are conducted through independent, third-party specialist auditing firms to ensure that all data handled by Software-as-a-Service (SaaS) systems, including Insurtech systems, remains protected. The continued threat of cyberbreaches means that insurers, customers, repairers, and suppliers all deserve to know that their data is protected. SOC 2 compliance gives insurance businesses and their stakeholders the peace of mind they need regarding the robustness, reliability, and security of their data management systems.

When insurers are choosing Insurtech providers, they must check to see that the provider has achieved SOC 2 Type II compliance with a report covering a 12-month period. The provider should also demonstrate the intention to undergo recurring audits and maintain compliance. The SOC 3 report, which is a more top-level version of the compliance report that doesn’t include confidential technical details and is specifically intended for audiences including potential customers, will validate the company’s achievements with regard to meeting all data security, availability, integrity and other requirements of the SOC 2 audit.

Insurers and their suppliers are continually subjected to rigorous and ever-changing regulatory requirements, as well as mandatory requirements of the industry’s own General Insurance Code of Practice. However, SOC 2 is not merely another compliance mechanism. It helps insurance businesses continually monitor and improve the systems they use to manage highly valuable and private customer data.

This is an important tool in not only demonstrating sound business practices, but also in helping to keep threats at bay. It also helps mitigate the risk of fraud when it comes to being the caretakers and protectors of valuable personal customer data.

Stelvio recently achieved SOC 2 Type II compliance following an independent audit from KPMG. Our SOC 2 compliance report details the 158 controls that we have in place to ensure that we meet the trust service principles with respect to the storage, security, availability, processing, integrity, confidentiality, and privacy of our customer data.

Stelvio has 30 years of experience providing customised technology solutions to fit every client’s unique requirements while keeping pace with changing business needs, industry-specific requirements and regulatory controls, and technological evolution. To find out more about how to best use technology in your insurance processes while remaining compliant, contact the team today.

[1] https://www2.deloitte.com/za/en/pages/risk/articles/service-organisation-controls.html