The Importance of Data Privacy in Mergers and Acquisitions: A Closer Look at General Accident Insurance Company’s Acquisition Plans under the Jamaican

The Importance of Data Privacy in Mergers and Acquisitions: A Closer Look at General Accident Insurance Company’s Acquisition Plans under the Jamaican Data Protection Act 

As General Accident Insurance Company Jamaica Limited (GENAC) gears up for its next acquisition, as highlighted by its latest Annual General Meeting (AGM) notice, it’s essential to consider not only the financial implications but also the data protection challenges that accompany such corporate actions. With Jamaica’s Data Protection Act, 2020 (DPA) now in effect, companies must prioritize data privacy when expanding through acquisitions, particularly as mergers are often followed by significant data integration processes. This blog explores the potential risks of data breaches post-acquisition, the provisions of Jamaica’s DPA, and real-world cases where companies have faced significant data breaches after mergers. 

Data Privacy Risks in Mergers and Acquisitions 

Mergers and acquisitions (M&A) often involve the transfer of vast amounts of sensitive data, including customer information, employee records, and financial data. During this period of integration, personal data may be vulnerable to unauthorized access or breaches due to mismanagement, incompatible systems, or poor cybersecurity practices. For a company like GENAC, which holds a 25% market share and is expanding regionally, any data breach post-acquisition could lead to severe reputational and financial repercussions. 

Why Does Data Privacy Matter During an Acquisition? 

1. Increase in Data Vulnerability: Acquisitions often require the merging of IT systems, which may be incompatible or poorly secured. This process can expose the personal data of employees, customers, and business partners to cybercriminals. 

1. Compliance with Legal Standards: Under the Jamaican Data Protection Act, companies are legally bound to safeguard personal data during and after an acquisition. Failure to do so could result in penalties, including fines and imprisonments. 

1. Evolving Threat Landscape: Cyberattacks have become increasingly sophisticated. In the wake of an acquisition, attackers may target companies undergoing transitional periods, knowing that security might not be at its strongest. 

Understanding the Jamaican Data Protection Act 

The Data Protection Act, 2020 governs how organizations in Jamaica must manage and protect personal data. It imposes various obligations on companies, such as obtaining consent for data processing, ensuring data security, and reporting breaches to both the Commissioner and affected data subjects within 72 hours of discovery. 

Specifically, the Act applies to any data controller (like GENAC) that processes personal data of individuals in Jamaica or uses equipment located in Jamaica for processing data. Importantly, the Act mandates data protection impact assessments (DPIAs) for high-risk processing activities, which acquisitions often entail due to the volume and sensitivity of data involved. This means that before completing an acquisition, GENAC should conduct a DPIA to assess the risks associated with data transfers and ensure compliance with the Act. 

Lessons from Data Breach Cases Post-Acquisition 

Mergers and acquisitions can make companies more vulnerable to cyber threats, particularly during the integration of systems. Here are two notable examples where data breaches occurred after acquisitions: 

Marriott International (2018): One of the most significant post-acquisition data breaches occurred after Marriott acquired Starwood Hotels. Hackers gained access to Starwood’s systems in 2014, but Marriott did not discover the breach until 2018, well after the acquisition was completed. The breach compromised the personal information of 500 million guests, leading to fines under the General Data Protection Regulation (GDPR). The case underscores the importance of conducting thorough due diligence on data security during acquisitions. 

Best Practices for GENAC and Jamaican Businesses 

To prevent data breaches and ensure compliance with Jamaica’s DPA, Jamaican businesses, including GENAC, should adopt the following best practices during acquisitions: 

1. Conduct Comprehensive Due Diligence: Before finalizing an acquisition, ensure that the target company’s data privacy and security measures meet regulatory standards. This includes reviewing their history of data breaches, conducting vulnerability assessments, and verifying compliance with the DPA. 
2. Data Protection Impact Assessment (DPIA): As required under the Jamaican Data Protection Act, GENAC should conduct a DPIA before processing or transferring any personal data during the acquisition. This will help identify potential risks and develop mitigation strategies. 
3. Update Privacy Policies: Ensure that privacy policies and data protection agreements are aligned across both the acquiring and target companies. Inconsistent policies may lead to data breaches or non-compliance with the DPA. 
4. Invest in IT Security: Integrating new systems post-acquisition is a critical point where breaches can occur. Investing in cybersecurity tools, including encryption, access controls, and continuous monitoring, will help protect personal data during the integration process. 
5. Post-Acquisition Audit: After the acquisition, perform a comprehensive audit to assess the security of integrated systems and ensure compliance with all relevant data protection laws. 

Conclusion: Navigating the Data Privacy Challenges of Acquisitions 

GENAC’s potential acquisition presents new opportunities for growth, but it also brings the challenge of protecting personal data. Under Jamaica’s Data Protection Act, companies are legally obligated to safeguard data and report breaches promptly. By learning from past incidents and implementing strong data protection practices, GENAC and other Jamaican companies can mitigate the risks of data breaches during mergers and acquisitions, ensuring both business success and compliance with the law. 

If your company is planning an acquisition, ensure that data protection is a priority. Reach out to us for guidance on conducting DPIAs during the M&A process. We have made our abbreviated DPIA Playbook for board members and CEOs to be aware of what should indeed take place. Click here for your copy of DPIA Playbook