“At this point, they are imaged and put in clients' files and we throw the papers away,” Mr. Yates noted.

One of his main concerns, he said, is that with the automation, more and more often, his agency is completing applications electronically and is transmitting them electronically to the carriers. One of the things that gets him worried, Mr. Yates added, is that once the data gets to carriers, it can be sent virtually anywhere in the world.

“If my underwriter happens to be a friend with my agency competitor, it would just take one click of a button to send over my information to my competitor. The level of security is very different among carriers,” he argued. “How you keep that propriety information safe and private is becoming an immense issue.”

Furthermore, the danger for unauthorized access to private client information looms not just from outside, but sometimes from within.

“Travelers is particularly good at securing agency data. They have a system where they can limit access to off-site employees. But with some carriers, any of my off-site workers could access the system,” Mr. Yates said.

Jim Armitage, vice president at Arroyo Insurance Services in South Pasadena, Calif., added that his biggest security concern is computer viruses compromising his corporate database.

“We have firewalls for our agency system and we have a corporate virus protection systemthat's something that's getting updated all the time automatically,” said Mr. Armitage. “When our employees turn their computers on, the system does a computer-virus scan automatically because there have been some problems in the past,” he noted.

If the right virus got spread, the agency could lose every bit of its data, added Richard Beedle, also from Arroyo Insurance Services.

“Some of these viruses can actually blow up all the data in your hard drive. That would put us in a world of hurt,” Mr. Beedle said. “We may have to restore operating systems, we may have to restore all the e-mail address books. But the good news is that we make backups on our data twice daily, so we can put everything back together again.”

Another potential area of vulnerability for Mr. Armitage's agency is its interactive Web site. “We offer clients an interactive access to our Web site which we outsource. It allows our customers to go to our Web site and then get access to their data and make certain changes, [such as getting] certificates of insurance through the Internet,” Mr. Armitage noted.

“We use risk management techniques like having our Web site hosted off-site, but any business that has a Web site has got to have a security concern on this,” he said.

Tom Kenney, president of Key-Freeman in Corona, Calif., added that his biggest concern is keeping his agency's data confidential.

“Right now, we have two firewalls built into our computer system. The reason for that is that we are almost entirely paperless,” Mr. Kenney said. “When we get documents in, we scan them, and then we shred them. We maintain our records electronicallybacked up entirely on tape drivesand we take them off-site.”

As for the dual firewalls, one is through the vendor the agency uses for the access to the Internet. “And then we have a firewall built into our communications server as well,” he said.

Mr. Kenney noted that his firm also offers an interactive Web site, which works back through a firewall. “Nobody is coming into our server via the Web site. They can do auto and homeowners quotes on our Web site, but that gives them access to our ratings vendor's software. And that produces e-mails back to our e-mail vendor that then are transmitted to us. So you have to go through vendors' firewalls and our firewall to come in,” he noted.

GNW Insurance Services in West Los Angeles, Calif., also has firewalls set up for its data system, and it uses virus scans every day on all computers and servers. “We are constantly upgrading because we want to make sure that nothing happens,” said Jeff Newman, vice president at GNW Insurance.

“Constantly there are new threats, there are always new products coming out, new ways to do things, and we want to make sure that our security will match whatever technology is out there,” Mr. Newman said.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 2, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.