Addressing Cyber Risks in Professional Indemnity Insurance for Law Firms

Professional Indemnity Insurance with Cyber Cover for law firms is crucial due to the increasing risks of cyber-attacks. Regulatory intervention requires clarity on cyber insurance coverage. Our proposals aim to maintain consumer protection, provide insurers with clear guidelines, and offer clarity to law firms on policy coverage. Feedback sought on proposed changes in insurance arrangements.

• Cyber Risks
• Professional Indemnity Insurance
• Law Firms
• Regulatory Intervention
• Consumer Protection

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1. Professional Indemnity Insurance: cyber cover Emma Tunley & Jatinder Loyal

2. Agenda The risk of cyber-attacks on law firms Regulatory intervention Our MTCs Our proposals Your views

3. The risk of cyber-attacks 'Cybercrime continues to rise in scale and complexity, affecting essential services, businesses and private individuals alike. Cybercrime costs the UK billions of pounds, causes untold damage, and threatens national security. National Crime Agency, 2019 Cybercriminals are developing and boosting their attacks at an alarming pace, exploiting the fear and uncertainty caused by the unstable social and economic situation created by COVID-19.' J rgen Stock, INTERPOL Secretary General

4. The risk of cyber-attacks Law firms hold critically sensitive information and large sums of money for people and businesses. In the first half of 2020, firms told us that nearly 2.5m of money held by firms had been stolen by cybercriminals. Firms have had to quicky adjust to using technology during lockdowns - means that some systems are more vulnerable to attack.

5. Regulatory intervention The Prudential Regulation Authority (PRA), which regulates insurers, has asked them to identify, quantify and manage cyber insurance underwriting risk. Lloyd s of London mandated that all policies must provide clarity by either expressly excluding or expressly providing affirmative cyber cover.

6. Our MTCs PII policies for law firms are written on a broad "civil liability" basis for claims arising out of its private legal practice . The primary aim of a law firm s PII policy is to make sure that there is protection for consumers. For insurers to be able to exclude or provide affirmative cyber cover they would need to make changes to policies that are written in accordance with our MTCs.

7. Our proposals aim to: Maintain the current level of consumer protection intended by our insurance arrangements. Allow insurers to be clear in their response to regulators and therefore better able to manage their exposure. Provide clarity to law firms about what is and is not covered by their PII policy.

8. Your views Do you agree with the proposed change to our MTCs? Does the draft clause, in your view, maintain, expand or reduce the current scope of consumer protection afforded through our PII arrangements? Does the draft clause bring about any unintended consequences and if yes, how might the draft clause be amended? Are there any other impacts which you think we need to consider?

9. The consultation can be found at sra.org.uk/consultations You have until 25 May, 2021 to respond