Maybe I just have fraud on the brain since attending last week'sannual PLUS International Conference in Chicago (see ourWeb exclusive article on data breach), wherethe subject came up a lot, but there does seem to be a lotof synchronicity about fraud issues in the zeitgeistlately.

Just today, National Underwriter posted the findings ofa new PricewaterhouseCoopers global economic crimesurvey showing that insurance was the secondmost fraud-prone industry, right after communications. It's notsurprising that insurance is a target, given the amount of dataused in processing products and services. Typical crimesinclude asset misappropriation (such as inventory theft),accounting fraud, and bribery — all crimes that are easier tocommit because of reduced resources deployed for internal controls,according to PwC.

The threat is just as real for the average joe, especially in aworld fueled by virtual transactions. Electronic data files aredismayingly easy to hack for expert criminals who know what they'redoing, according to Lori Nugent, partner at law firm Wilson ElserMoskowicz Edelman & Dicker. Lori, a specialist in thesecurity breach area, scared the bejezuz out of me by describinghow easy it is for sophisticated hackers, many of whom are part ofhuge international fraud rings, to grab data like credit card andSocial Security numbers and ruin your life.

For agents, the burden is on you to protect your customers'confidential information — hence the FTC “red flags” ruling. But you shouldn't needa federal mandate to establish internal safeguards for your firm.In a conversation about data security breaches on the LinkedIn ACT group, several readers offeredrecommendations on how to start, including:

• Creating a data security plan and establishing propercontrols
• Limiting data access with proper security rightsassignment
• Establishing a system to eliminate paper in an encryptedrepository
• Limiting access to confidential life/health data torestricted employees
• Limiting the ability to access personal information betweencommercial and personal files
• Establishing security settings so only producers have access totheir clients' data

Tech guy Steve Anderson has written a book on client datasecurity that's worth a read — check it out at www.clientdatasecurity.com.

Meantime, with the red flags law looming, what are you doing tosecure your clients' data?