Enhancing Data Security in the Insurance Industry: The Role of Encryption in Use

The insurance industry sits at the crossroads of vast data collection and stringent privacy requirements. Every day, insurance companies process enormous volumes of sensitive customer information—from personal identifiers like Social Security numbers and birthdates to health records, financial details, and property valuations. This mountain of data forms the backbone of the industry’s core functions: underwriting policies, processing claims, detecting fraud, and delivering personalized customer service.

However, this wealth of data also creates significant security challenges. As the insurance sector continues its digital transformation journey, the protection of this sensitive information has become not just a regulatory requirement but a critical business imperative. Customer trust, once broken by a data breach, can be nearly impossible to restore. Meanwhile, regulatory frameworks like GDPR, HIPAA, DORA, and various state privacy laws impose increasingly stringent requirements for data protection—with substantial penalties for non-compliance.

Current Data Security Challenges

Despite significant investments in cybersecurity, the insurance industry faces persistent challenges in fully protecting sensitive customer data. The most glaring vulnerability lies in how data is handled during active processing—precisely when it’s most valuable to both legitimate users and potential attackers.

Insurance operations require constant access to customer information. Claims adjusters need policyholder details to process claims efficiently. Underwriters require access to risk assessment data to price policies accurately. Customer service representatives need immediate access to policy information when clients call. Each of these operational necessities creates a moment when data must be accessible, readable, and usable—traditionally meaning it must be in plaintext form.

This operational reality creates a significant security gap. While most insurance companies have implemented strong perimeter defenses and encryption for data at rest (stored in databases) and data in transit (moving between systems), data remains vulnerable during active use. This vulnerability is particularly concerning as the frequency and sophistication of cyber attacks continue to rise.

The risk is substantial: a 2023 report from the FBI’s Internet Crime Complaint Center revealed that cyber crimes resulted in over $12.5 billion in losses, a 22% increase from the previous year. The insurance sector, with its wealth of valuable personal data, remains a prime target for these attacks.

Limitations of Traditional Encryption Methods

Traditional encryption approaches in the insurance industry have focused primarily on two states of data: at rest and in transit. When data is at rest—stored in databases, archives, or backups—it can be encrypted using strong algorithms that render it unreadable without the proper decryption keys. Similarly, when data is in transit—moving between servers, applications, or to end users—it can be protected through secure communication protocols like TLS/SSL.

However, these conventional methods leave a critical gap: data in use. For data to be processed, analyzed, queried, or displayed in applications, it has traditionally needed to be decrypted into plaintext. This creates what security experts call the “encryption gap”—a window of vulnerability where sensitive information exists in an unprotected state.

This gap is particularly problematic for insurance companies for several reasons:

1. Database Operations: Insurance databases must be queryable to support day-to-day operations. With traditional encryption, this means decrypting data for processing, leaving it exposed during these critical operations.
2. Legacy Systems: Many insurers operate with complex ecosystems of legacy systems that weren’t designed with modern encryption capabilities in mind, making it difficult to implement comprehensive protection.
3. Third-Party Integrations: Insurance workflows often involve multiple third-party services and data exchanges, each representing a potential point of exposure if data must be decrypted for processing.
4. Real-Time Processing Requirements: Insurance operations increasingly demand real-time data processing, leaving little room for cumbersome encryption and decryption cycles.

These limitations create a fundamental dilemma: how can insurers simultaneously make data accessible for legitimate business purposes while keeping it protected from unauthorized access?

Implementing Encryption in Use

Encryption in use represents the next frontier in data security—addressing the critical vulnerability that exists when data is being actively processed. Unlike traditional encryption methods that protect data only in its static or transit states, encryption in use enables computation, searching, and analysis of data while it remains fully encrypted.

For the insurance industry, implementing encryption in use offers several transformative benefits:

1. Continuous Protection: Sensitive policyholder information remains encrypted throughout its entire lifecycle—including during active processing—eliminating the encryption gap that attackers traditionally exploit.
2. Regulatory Compliance: With regulations like DORA specifically mandating encryption of data in use (particularly for financial institutions and their vendors), insurance companies can ensure compliance with current and emerging regulatory requirements.
3. Reduced Breach Impact: Even if perimeter defenses are compromised, encryption in use ensures that attackers gain access only to encrypted data, not usable plaintext information—effectively neutralizing the impact of breaches.
4. Secure Multi-Party Collaboration: Insurance operations often require sharing sensitive data with reinsurers, third-party administrators, and other partners. Encryption in use enables secure collaboration without exposing the underlying data.
5. Protection for AI/ML Initiatives: As insurers increasingly leverage artificial intelligence and machine learning for underwriting, claims processing, and fraud detection, encryption in use can protect the sensitive data used to train and operate these models.
6. Support for Cloud Migration: By maintaining encryption during processing, insurers can more confidently migrate sensitive workloads to cloud environments, knowing that data remains protected even in shared infrastructure scenarios.
   

The implementation of encryption in use creates a fundamental paradigm shift: instead of treating encryption as an occasional state, it becomes the default, permanent condition of sensitive data.

Paperclip’s Solution

Paperclip SAFE® represents a breakthrough approach to the challenges of protecting data in use within the insurance industry. Unlike more theoretical approaches to encryption in use that struggle with performance limitations, SAFE delivers practical, deployable protection for real-world insurance operations.

SAFE employs Searchable Symmetric Encryption (SSE) combined with proprietary shredding technology to ensure that insurance data remains encrypted at all times—even during active queries and operations. This approach differs significantly from other technologies in the space:

1. Performance Without Compromise: Unlike Homomorphic Encryption (HE), which often introduces significant performance penalties, SAFE adds only milliseconds to standard database operations—maintaining the responsiveness critical for insurance workflows.
2. No Architecture Redesign: SAFE integrates at the API layer without requiring redesign of database architecture or application code—a crucial advantage for insurance companies with complex, interconnected systems.
3. Seamless User Experience: End users experience no changes to their workflow, with encryption and decryption happening transparently without user intervention or training.
4. Comprehensive Search Capabilities: SAFE supports both whole word and partial word searching on encrypted data—essential for insurance professionals who need to query customer records quickly and efficiently.

For insurance companies specifically, SAFE addresses several industry-specific challenges:

• Claims Processing: Adjusters can securely access and process sensitive claim information while the underlying data remains encrypted, reducing the risk of exposure during this critical workflow.
• Underwriting: Sensitive health and financial information used in underwriting decisions remains protected even during active analysis and risk assessment.
• Customer Service: Representatives can access policy details and handle customer inquiries without exposing plaintext data, maintaining security even in high-volume service environments.
• Compliance Documentation: SAFE provides the technical controls and audit trails needed to demonstrate compliance with insurance industry regulations and data privacy laws.

Use Case: Major Insurance Provider Implements SAFE

A leading insurance provider handling millions of customer records could address the vulnerability of data during active processing. After implementing Paperclip SAFE, they would achieve:

• Continuous encryption of all sensitive customer data, including personally identifiable information (PII) and protected health information (PHI)
• Compliance with emerging regulations requiring encryption of data in use
• Near-zero impact on application performance, with query times increasing by only 20-50 milliseconds
• No disruption to existing workflows or user experience
• Significant reduction in the scope of potential data breach impacts

The implementation process would require minimal disruption, with integration at the API layer and no need for extensive retraining of staff or redesign of existing systems.

Conclusion

As cyber threats continue to evolve in sophistication and regulatory requirements grow more stringent, the insurance industry must address the fundamental vulnerability that exists when data is being actively processed. Traditional approaches that protect data only at rest and in transit are no longer sufficient in a landscape where attackers specifically target data during its most vulnerable moments.

Encryption in use represents not merely an incremental improvement in security practices, but a paradigm shift in how insurance companies approach data protection. By ensuring that sensitive information remains encrypted throughout its entire lifecycle—including during active processing—insurers can dramatically reduce their attack surface while maintaining the operational efficiency their business demands.

For insurance executives and security leaders, the implementation of encryption in use should be viewed not as an optional enhancement but as a necessary evolution of their security strategy. The technology has matured to the point where solutions like Paperclip SAFE can deliver both the security benefits of continuous encryption and the performance requirements of modern insurance operations.

The transition to encryption in use aligns perfectly with the broader industry move toward data-centric security—focusing protection on the data itself rather than just the perimeters that surround it. As we’ve seen repeatedly, perimeters will eventually be breached, but properly encrypted data remains protected regardless of where it resides or how it’s being used.

Insurance companies that take the lead in implementing encryption in use will not only strengthen their security posture and ensure regulatory compliance, but may also find themselves with a significant competitive advantage in an industry where customer trust is the ultimate currency.

Visit www.paperclip.com/SAFE to learn more or contact us to schedule a demonstration of how SAFE can transform data protection in your insurance operations.