Consumer Security Worries Hamper E-Commerce

Despite the obvious benefits of speedy service and convenience offered by the Internet, the majority of consumers in a recent survey said they are concerned about security when it comes to sending medical and personal property insurance information online.

According to Old Greenwich, Conn.-based IVANS, which sponsored the survey, “Insuring Consumer Confidence Online,” 74% of consumers surveyed expressed concern with their doctors sending medical information to an insurance company over the Internet. Additionally, 66% were concerned about the privacy and security of property claims information being exchanged via the Internet.

IVANS says the survey indicates that the majority of Internet users–especially younger, more experienced users–are “concerned and skeptical” about their information being sent over the Internet. Survey respondents most concerned about security of their medical data on the Internet were between 35 and 44 years of age.

The results came from a telephone survey of more than 2,000 adults conducted by Opinion Research Corporation International, Princeton, N.J., in October. The survey asked about Internet information transfers that are “a transaction away from a consumers transaction,” as well as direct sending of information from consumers to companies and agents, says Clare DeNicola, senior vice president of network services for IVANS.

“There is a real opportunity for health and property-casualty insurers to educate consumers about the security measures they have taken to protect personal insurance data being sent over the Internet,” notes DeNicola. “The survey results show that many consumers are not yet aware of the advanced networking technologies available today that can protect their data on the Internet.”

But are insurers actually taking such security measures? “Some companies are doing nothing, some are doing very little and some are doing the whole spectrum,” DeNicola says. “Most are doing encryption [of data] at a minimum, while others are taking the next step and securing their own virtual private networks.”

Encryption turns data into a coded stream of information that can only be read by an authorized party who has the key to the code. A virtual private network (VPN) is a computer network that is part of a public network, but appears to the customer to be a private national or international network. These systems use encryption and other security methods to ensure that only authorized users can access the network.

“In health insurance, for example, some [security measures] are mandated,” says DeNicola. “We have quite a few health insurers using secured network services, not even using the Internet.”

She adds, however, that carriers need to let consumers know that the safeguards are there. “Some insurers do say that your data is protected, but many dont,” she observed.

The survey also pointed out, however, that consumer trust is a key issue in e-commerce. “In order for e-commerce to be truly effective for the [insurance] industry, consumer trust must be secured,” the survey noted. “The smallest violation of a consumers trust would be devastating and could destroy a companys credibility. Insurers need to make sure consumers understand what is being done to protect their data.”

According to Judy Johnson, vice president, insurance strategy, for Sapiens Americas, Cary, N.C., consumers are “absolutely justified” in feeling skeptical about the security of online transactions. “The issue is not about whether the Internet is secure; the issue is about whether we can trust the insurance company to do the right thing,” she states.

When it comes to security measures for online transactions, says Johnson, insurers “arent doing a lot,” despite the fact that levels of concern have been raised after the attacks of September 11, and that there has been increased media focus on terrorism and cyberterrorism.