Royal and Sun Alliance (RSA) has been fined £150,000 following the loss of personal information of nearly 60,000 customers.
The Information Commissioner's Office (ICO) said the fine followed its investigation into the theft of a hard drive device from the insurer's offices in West Sussex containing 59,592 customers' names, addresses and bank account details including account numbers and sort codes.
The device also held limited credit card details of 20,000 customers, although CVC numbers and expiry dates were not affected.
ICO enforcement officers found that RSA did not have appropriate measures in place to protect financial information by preventing the theft.
It said the device was stolen either by a member of staff or a contractor, adding that the information on it was not encrypted and the device has never been recovered.
ICO head of enforcement Steve Eckersley said: "Customers put their trust in companies to keep their information safe, particularly financial information.
"When we looked at this case we discovered an organisation that simply didn't take adequate precautions to protect customer information.
"Its failure to do so has caused anxiety for its customers not to mention potential fraud issues."
He added: "There are simple steps companies should take when using this type of equipment including using encryption, making sure the device is secure and routine monitoring of equipment.
"RSA did not do any of this and that's why we've issued this fine."
An RSA spokeswoman said: "The ICO fined us for not foreseeing the risk that the theft of a storage device could cause and for not protecting it adequately.
"RSA serves nine million customers in over 100 countries and we take a breach of our security and protocols very seriously.
"Whilst there remains no evidence to suggest that the stolen storage device has resulted in any economic loss for the customers involved, we recognise that this should have never have happened and we would like to say sorry once again to those of our customers and partners who were impacted.
"We have reviewed and reinforced our data protection procedures to mitigate the risk of this happening again - the substantive work that has been undertaken since then to improve date protection in our company has been acknowledged by the ICO."