Lexis®Library update: The clause has been drafted with legal professionals and insurers, and it has been submitted to the Legal Services Board for final approval. If agreed, it should be in place for any insurance renewals from early 2022 onwards.
The clause means insurance policies will explicitly state whether cover for cybercrime is available and specify what losses fall within scope for a potential claim. The cover is for client and third-party protection. Losses to the law firm, ie first-party losses (except for certain costs of investigating and defending a claim) are not covered. Firms can choose to purchase a separate cyber policy for other risks.
The SRA has also published a summary of responses to the consultation regarding the addition of the new clause. Some respondents, including law firms, agreed that the SRA should be making changes to the MTCs. Insurers argued that the clause should reduce the level of cyber cover that is currently within the MTCs. While some said that the current MTCs give limited scope to manage cyber exposure and this will impact on insurers’ risk appetites and pricing, others argued that any losses caused by a cyber event should be subject to separate cyber insurance policies. One insurer said that while the clauses provided ‘clarity’ on what is covered, they did not provide ‘comfort’. These comments contrast with the Law Society, who suggested that the level of cover should be extended to cover first-party losses.
The SRA Chief Executive, Paul Philip, said ‘professional indemnity insurance offers key protection for the public. Law firms handle large amounts of client money and sensitive information, and that makes them an attractive target to cybercriminals. The clause on cyber losses provides real clarity for consumers, law firms and insurers about client and third-party protection in the event of cyber-attack, without changing the amount of cover specified by the minimum terms and conditions.’
Sources:
• Cybercrime clause makes liability clear
• Professional indemnity insurance: affirmative cyber cover
This content was first published by LNB News / Lexis®Library, a LexisNexis® company, on 25 October 2021 and is published with permission. Further information can be found at: https://www.lexisnexis.co.uk/
