Zurich Insurance promises changes after data loss

Zurich Insurance has promised to improve its information security after losing personal financial information on 46,000 British clients through careless handling of unencrypted backup tapes.

The back-up tape, which also contained personal details of 1,800 third party insurance claimants from the UK, was lost by Zurich's South African sister company during what was described as a routine transfer to a data storage facility in South Africa in August 2008.

In total, 51,000 British records were on the tape, along with with a much larger number of details about Zurich customers in South Africa (550,000) and Botswana (40,000). Zurich's UK arm wasn't informed about the problem until a year later.

There's no evidence that the information was subsequently used in ID theft or other scams in any country, but that's down to good luck rather than basic safeguards, which were notably absent.

The case was reported to UK privacy regulators, who extracted a promise from Zurich to improve its procedures or risk tougher action for any future data breaches.

In particular, Zurich Insurance plc pledged (pdf) to apply encryption controls on backup records and apply "controls to monitor and promptly report potential or actual data loss activity" in future.

Zurich said: "where any future movement of back-up tapes containing personal data is required, ZIP UK will ensure that appropriate data security procedures, including the use of encryption where appropriate, are in place;".

The insurance giant also promised to carry out staff training to prevent future similar breaches by improving lax backup handling procedures, as explained in a statement (pdf) on the case issued by the ICO. The company said all this had either already happened or would happen very soon.

Chris McIntosh, chief exec of data encryption expert Stonewood, said the incident illustrated the need for organisations to ensure their data security policies were "airtight at every single step in that data's lifecycle".

"This is especially important when operating in regions such as South Africa which, unfortunately, has a reputation for data theft and fraud. Indeed, the issue with this loss is not just the loss itself. It is the tardiness with which the loss was eventually reported. This has resulted in the data of a further 5,000 UK customers being threatened, thanks to deficiencies in operating procedures which caused the original loss not being addressed immediately," McIntosh added. ®