by Gene, originally posted to Axiom
“Exposure” is a versatile word. It is often—or almost always—used in a negative sense.
- Exposure to Ultraviolet Radiation (UV rays) may lead to sunburn, premature aging of the skin, and melanoma.
- Exposure of the skin to extreme cold causes dangerous drops in core temperature, restricted blood circulation, frostbite, and damage to extremities
- Online, there is a constantly evolving defense system intended to keep the user from exposure to bad actors—passwords, biometric recognition. two-factor authentication—and the pressure continues to mount to keep us safe from exposure of our private and financial information.
Exposure means vulnerability. That is the connective tissue. Exposure to sun, cold, financial loss, catastrophe, or data misuse all share one thing: something valuable is left unprotected.
This is where insurance lives and why it exists: to mitigate the risk caused by exposure, and when it comes to weather, we are all exposed to one degree or the other, largely dictated by where we live.
Exposure is the Primary Concern of Insurance.
“Exposure” is a key component in the insurance industry. The greater the exposure, the greater the risk. The greater the risk, the bigger the premium or the higher the deductible—or both.
- Exposure means vulnerability. Physical vulnerability, financial vulnerability, personal vulnerability.
- Insurance exists because of exposure. We identify it, price it, inspect it, document it, and transfer some of its consequences.
- But modern claims create a second exposure. The moment a loss is reported, the insured’s private life and protected information begins moving through a network of people and systems.
- That second exposure is consumer data. Photos, addresses, phone numbers, financial documents, mortgage information, family details, images of their home, schedules, notes, and sometimes deeply personal circumstances.
- That creates a chain of trust. Carrier, IA firm, TPA, field adjuster, desk adjuster, estimator, software platform, contractor, vendor. Every touchpoint is a potential flashpoint. Every entity involved is a potential weak link in the chain of ownership of the data of a life.
An insurance claim is a web of risk and trust.
IA Firms are More Than Staffing Partners. They are Custodians of Trust.
Nothing in insurance is as simple as it sounds. When you are transferring risk, exposure becomes a primary concern.
The NAIC Insurance Data Security Model Law (MO-668-1) specifically addresses third-party service provider oversight, requiring licensees to exercise due diligence in selecting third-party service providers and to require them to implement appropriate safeguards.
Likewise, the Federal Trade Commission’s Safeguards Rule requires covered financial institutions to maintain administrative, technical, and physical safeguards to protect customer information.
Maximum Service Means Minimum Unnecessary Exposure
IA firms handle capacity but become custodians. It is vital that they operate in a closed, secure environment with proper certifications, controls, access restrictions, encryption, audit trails, and tested security protocols.
Questions that must be asked and answered:
- Who needs the information?
- Why do they need it?
- Where is it stored?
- How is it transmitted?
- How long is it retained?
- Who is accountable for it?
The insured bought protection from one kind of risk. They must not be subjected to another through carelessness, weak systems, loose communication, or undisciplined vendor management.
Independent adjusting firms serve carriers best when they understand that every claim assignment carries two obligations: assess the covered exposure accurately and protect the human exposure vigorously.
What duties does this imply?
For the carrier, it means choosing partners carefully, vetting their security capabilities, and treating data protection as part of claim quality.
For the IA firm, go well beyond the minimum standard. Invest in security. Commit to transparency in your partnerships. Stress test your systems regularly. Choose your personnel carefully. Handle every claim as if the information belonged to your own family. While it is yours, it is yours to protect.
For the homeowner, it means staying informed. The question should go beyond, “What does my policy cover?” It should also include, “Who has my information, why do they need it, and how is it protected?”
Double exposure requires diligent commitment to providing maximum protection.
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My name is Gene. This is Axiom.