Zurich Insurance has been fined £2.275 million ($3.5 million) for losing the bank and identity details of 46,000 policy holders.
The fine is the highest levied by the Financial Services Authority (FSA), the UK regulator, on a single firm for data security failings. The FSA criticised Zurich for inadequate systems and controls to prevent the loss of customers’ confidential information, including credit card, bank account and identity details.
The loss of 46,000 customers’ details dates back to 2008 when Zurich Insurance Company South Africa (Zurich SA) lost an unencrypted back-up tape during a routine transfer to a data storage centre.
Zurich UK, who outsource the processing of some of its general insurance customer data to Zurich SA did not learn about the loss, which included personal details, card and bank account details and information regarding insured assets, until a year later.
“Zurich UK let its customers down badly. It failed to oversee the outsourcing arrangement effectively and did not have full control over the data being processed by Zurich SA,” said Margaret Cole, the FSA’s director of enforcement and financial crime.
While the loss could have led to fraud and financial loss for its customers, Zurich UK has seen no evidence to suggest that the personal data was compromised or misused.
Zurich UK failed to take reasonable care to ensure it had effective systems and controls to manage the security of customer data and the firm also failed to ensure sufficient measures were in place to prevent financial crime, the FSA said.
As Zurich UK agreed to settle at an early stage of the investigation the firm qualified for a 30 per cent discount. Without this discount the firm would have been fined £3.25 million.