April 4, 2012 – In 2010, Blue Cross and Blue Shield of Tennessee identified 998,422 current and former members as being at risk for identity theft after 57 hard drives were stolen six months prior. The data breach cost the regional company $7 million, while the plan's employees and vendors spent more than 114,000 hours of labor reviewing back-up data and notifying affected members.

“Depending on the degree of data loss, an insurer could go out of business if it doesn’t have customer contracts and policies backed up somewhere on the premises,” said Gytis Barzdukas, product management director at Mozy, a data security service provider.

And, the chances of this happening are somewhat high, according to a Mozy survey of 640 small-to-midsize businesses (SMBs), including insurers. The results indicate that 85 percent of SMBs do not use remote, automatic online backup. Of those that do perform backups, the most prevalent methods are those that can most easily be lost, stolen, deleted or destroyed, such as using external hard drives (53 percent use them), company servers (36 percent) and USB thumb drives (31 percent).

One-third of SMBs allow employees to select their own method of backup for their data at work, while 60 percent of companies surveyed do not budget for any form of backup compared to only 15 percent that use remote online services, according to the survey.

The survey also found that when data is lost, it is rarely recovered. In the last year, nearly 50 percent of all businesses surveyed reported that an employee's hard drive had crashed, and in 72 percent of the cases data was not fully recovered.

This story originally appeared at Insurance Networking News.

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