Britain's City regulator slapped a $3.51 million fine on the UK branch of Zurich Insurance for data security failings after the loss of a tape in South Africa containing details on 46,000 insurance customers.
The Financial Services Authority said today the £2.275 million fine was the highest to date handed down to a single firm for data security failings.
Zurich UK, part of the Zurich Financial Services Group, did not have full control over the data being processed as part of an outsourcing agreement with its South African branch and was not aware of the tape's loss until a year later, the FSA said.
"Zurich UK let its customers down badly," Margaret Cole, the FSA's director of enforcement and financial crime, said.
"Firms across the financial sector would do well to look at the details of this case and learn from the mistakes that Zurich UK made."
The company said it had already taken measures to improve data security after it became aware of the loss, which occured in August 2008 as the tape was being transferred to a data storage centre.
"(Zurich UK) recognises this was a serious incident and regrets the concern the incident caused for a number of its general insurance customers," it said in response.
The FSA said the fine had been reduced by 30 per cent from £3.25 million after Zurich UK agreed to settle at an early stage.
Reuters