Hi Parmjit,
You are correct in saying that all communication between the database servers and your internet browser is encrypted when using the Clear Books application. More information on the security we employ can be found here: http://www.clearbooksltd.com/security/
To clarify the question about the storage of accounting data in the databases, it isn't encrypted. However whenever data is copied from the server for backup purposes it is encrypted using a very strong key, and whenever a backup of your own data is emailed to you it is encrypted with a secure unique key for your own personal data. The servers themselves are stored in data centres which have 24 hour on-site security.