6 API Security Essentials for Insurance Companies

In the modern digital ecosystem, APIs (application programming interfaces) are becoming critical for insurance companies as they play a foundational role in how internal systems, customer portals, and third-party services interact. These interfaces enable seamless communication between the applications and services insurance companies rely on daily, from policy management and claims processing to data integration with third-party vendors or partners. Whether your organization uses APIs to integrate legacy systems, manage client data, or streamline underwriting and claims handling, APIs are essential to the functionality of modern insurance platforms. However, without proper security measures, APIs can expose vulnerabilities that may lead to a significant data breach or unauthorized access, potentially compromising sensitive policyholder information.

API Attacks Can Happen to Anyone, Even Insurance Companies

No organization, including insurance companies, is immune to API attacks. Below are some high-profile examples that illustrate how critical it is for insurers to protect their APIs:

• Texas Department of Insurance (TDI): In January 2022, a software error exposed 1.8 million records of Texans who had filed insurance claims. The exposed data included social security numbers, addresses, dates of birth, phone numbers, and information about workers’ injuries. The data was available to the public from March 2019 to January 2022.
• Twitter: An API flaw resulted in a data leak for millions of users. This vulnerability allowed unauthorized parties to exploit a loophole within Twitter’s API, leading to the leak of user data, including phone numbers and email addresses, even when users had opted to keep that information private. While this incident affected a social media company, it underscores the broader implications for industries like insurance, where sensitive personal data (e.g., Social Security numbers, health records) could be at risk.
• Telco (Australia): Australian telecom giant Telco faced a significant breach when an unsecured API allowed attackers to bypass access controls. The attacker exploited weaknesses in Telco’s API security by sending unauthorized requests directly to target APIs, leading to the exposure of 9.5 million customer records. For the insurance industry, this highlights the importance of securing APIs that store and transmit customer details like policy information, claims history, and financial data.
• T-Mobile: In one of the largest API breaches to date, a bad actor gained access to an API at T-Mobile, resulting in a data breach impacting over 37 million customers. The attacker leveraged vulnerabilities in the API to obtain customer names, addresses, phone numbers, and account details. For insurance companies, which often manage similar volumes of personally identifiable information (PII), this breach emphasizes the need for robust API security to prevent unauthorized access to policyholder data.

These examples highlight how API vulnerabilities can lead to unauthorized access and the loss of sensitive data, which could be disastrous for insurance companies. Insurers face significant regulatory and reputational risks if their systems are compromised. This can result in financial losses due to regulatory penalties and the cost of addressing breaches. More importantly, insurers could suffer long-term damage to their credibility, which is crucial in an industry built on trust.

How Insurance Companies Can Mitigate API Risk

While API attacks are common and increasing in frequency, there are steps insurance companies can take to mitigate or reduce the risk:

1. Proper access controls and authentication

Insurance companies must implement strong access control measures such as role-based access control (RBAC) or multi-factor authentication (MFA). These measures are particularly important when APIs handle sensitive data like medical records or payment information. Only authorized users, such as brokers, underwriters, or customer service representatives, should be able to access specific APIs, and access should be limited based on roles and the least privilege principle.

2. Secure coding practices

Developers need to follow secure coding best practices to prevent API vulnerabilities from being introduced during development. For example, when coding APIs that interface with policy or claims systems, secure input validation can prevent attacks like SQL injection that could expose policyholder data. Regular code reviews and the use of automated security tools will help identify potential vulnerabilities before they reach production.

3. Secure configurations

Insurance companies often rely on third-party APIs to integrate with external services such as payment processors, reinsurers, or even regulatory bodies. It’s critical to ensure these APIs are properly configured to prevent unauthorized access. Misconfigured APIs can expose personal, financial, or claims-related data. Insurance companies should use secure communication protocols (like HTTPS) and disable features that provide attackers with unnecessary insights into system architecture.

4. Up-to-date patching

APIs that interact with insurance claims systems or actuarial models can be attractive targets for attackers. Keeping APIs and associated systems up to date with the latest security patches is essential. Insurance companies must ensure they have processes in place for rapid patching of any known vulnerabilities, particularly in critical systems managing customer or claims data.

5. Robust encryption

Insurance companies handle highly sensitive information, from health details to financial transactions. Encrypting API data both in transit and at rest ensures that even if an attacker intercepts communications or gains unauthorized access to systems, the data remains unreadable. Companies should regularly update their encryption standards to stay ahead of potential threats.

6. Logging and monitoring

Continuous monitoring of API activity is critical to identify and mitigate threats before they cause harm. Insurance companies should monitor API traffic for unusual patterns that could indicate attempted breaches. For example, APIs handling claims processing or premium payments should be closely monitored for anomalies, and detailed logs should be maintained to detect and respond to suspicious behavior in real-time.

Secure Your Insurance Company for the Future

By integrating these practices into their security framework, insurance companies can significantly reduce the risks associated with APIs and better protect policyholder data, claims systems, and core business processes. At Johnson Lambert, we specialize in guiding insurance companies through the complexities of API security, helping you implement the necessary measures to protect your digital assets and remain compliant with evolving industry regulations.

Johnson Lambert offers cybersecurity risk assessments tailored to the unique needs of the insurance industry. Partner with us to help safeguard your APIs and secure your organization against emerging threats. Contact our team today.