While 28% of firms bought cybercrime cover—an increase on the 21% who made the purchase in 2018—a further 33% of firms thought about it but didn’t go ahead, and 39% didn’t even consider it, according to the Law Society report, 'Latest trends in professional indemnity insurance for law firms', published last week.
Law Society president Lubna Shuja described the low take-up as ‘concerning’, given how more work is being conducted online post-pandemic.
Solicitors Regulation Authority minimum terms and conditions for professional indemnity insurance explicitly exclude from cover first-party losses from cyber attacks or other problems related to information technology. The Law Society has produced guidance on purchasing cyber insurance, available here.
A government report published in April, 'Cyber security breaches survey 2023', showed one in ten businesses had fallen victim to cybercrime in the previous 12 months. Larger businesses experienced higher risk—the strike rate was one quarter of medium-sized businesses, and nearly two-fifths of large businesses.
The professional indemnity insurance market for solicitors has hardened since 2018, when the Law Society last carried out a survey, with 56% (compared to 76% in 2018) reporting it was easy to purchase insurance.
Shuja said: ‘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.’
She said some firms could face much higher premiums, particularly where they had high staff turnover, large numbers of fee earners or carried out high amounts of conveyancing work. New firms and firms switching insurers have faced difficulties with some underwriters imposing minimum prices for premiums, she said. However, for firms working in low-risk areas, the premium increase was likely to be in the low single figures.
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