The Law Society of England and Wales is urging members to give “serious consideration” to purchasing cyber insurance after research showed that seven in 10 (72%) of law firms do not have this protection in place.
The Law Society research tallies with the UK Government’s Cyber security breaches survey 2023 which revealed that less than four in ten businesses (37%) and a third of charities (33%) reported being insured against cyber security.
With increasing concerns over the severity of ransomware, phishing, and denial of service attacks, the need for adequate insurance protection has become a major talking point for businesses in all sectors. Insurers have responded to the increasing number of claims and costs by requiring robust security controls and evidence they are working.
Findings from the research also shows:
- Purchasing professional indemnity insurance (PII) has become more difficult since 2018. Though more than half (56%) of firms still said they find it easy, compared to three-quarters (76%) in 2018
- There has been a hard market for solicitors’ PII since 2018. However, stability appears to be returning
- The level of risk for law firms has increased, due to rises in the amount of conveyancing work and number of fee earners
In 2021, the Solicitors Regulation Authority revised its minimum terms and conditions for solicitors’ PII to make it explicit that any first-party losses -those affecting the firm rather than clients- resulting from cyber-attacks or other problems relating to information technology, were excluded from cover.
As a result of the research, Law Society President Lubna Shuja has issued strong message to members saying:“As firms look to renew their insurance for October, our research provides useful information and market analysis. We encourage firms to give serious consideration to purchasing cyber insurance.
“Law firms are experiencing a greater level of risk in their insurance, which is highest among larger firms. Increases in the amount of conveyancing work and the number of fee earners have been substantial factors contributing to the growth in perceived risk.
“Our research shows that just 28% of firms have purchased cyber insurance. This is a small increase from the 21% who bought it in 2018.
“The latest government statistics show that one in 10 businesses (11%) – including a quarter of medium-sized businesses and almost two-fifths of large businesses – experienced cybercrime in the last 12 months. Considering how much more work is being conducted online post-pandemic, the low take-up is concerning.
“Our research reveals that a third of firms (33%) have thought about purchasing cyber insurance but did not go on to make a purchase. However, two in five firms (39%) have not even considered it, which is surprising, especially in light of recent regulatory changes.
“Cyber insurance policies vary in scope and coverage, so it is wise for firms to understand the potential threat and exposure. They need to develop their own risk management strategies.”
The Law Society has developed guidance online which helps members navigate the purchasing process. “Although stability is returning to the market, the process of buying PII has become harder:” she added. ” New firms entering the market and firms attempting to switch insurers have faced difficulties because of some underwriters’ imposing minimum prices for premiums.
“We advise firms to start budgeting for increased premiums and perhaps consider premium financing as a way to spread costs through the year. We also recommend firms start the renewal process early; around three months before your renewal date.
“That means that if you are one of the more than 40% of firms who still have the old common renewal date of 1 October, you should have contacted your broker already to start exploring the right cover for your firm.”
W Denis offers companies expert support and risk management solutions to protect business operations. Cyber exposures are evolving and it is important that businesses review their insurances, for suitability, using a specialist broker. To discuss this further with a broker at W Denis, please make arrangements with Daniel Moss at firstname.lastname@example.org or on 0044 (0)113 2439812 or contact Mark Dutton at email@example.com or on 0044 (0) 7831 366 469.