FSA sets record fine for Zurich Insurance

Wednesday, August 25, 2010

According to news reports, insurance giants Zurich Insurance Plc have been fined a record amount at the hands of an investigation by the Financial Services Authority (FSA). The firm have been asked to pay over two hundred thousand pounds following an investigation by the FSA which found Zurich to have failed in managing data security. Zurich were subsequently charged with a lack of proper procedure to safeguard the personal information of its customers.

The investigation by the FSA was initially prompted by Zurich admitting that they had lost almost fifty thousand customer records, containing personal information about each policyholder. This breach of data security ran the risk of exposing customers to financial damage, burglary or fraud, as some card and bank details were included in the data.

Despite the breach of security, it appears that no customer of Zurich UK has been adversely affected, and they have not heard of any person being compromised as a result of the slip. The event took place two years ago, when Zurich Insurance Company South Africa Limited (Zurich SA), managed to misplace a tape which was unencrypted, containing all the data. Zurich UK outsources some of its processing tasks to the South African branch of the organisation. They were not told of the security breach until a year after the data was lost.

A spokesperson for the FSA has commented that Zurich UK have let its customers down by not adequately safeguarding data, and the fine reflects the wide scale damage which could have been caused by the error. According to the FSA, if Zurich had not agreed to an early settlement, the fine would have reached the three million mark.