Law Society: 7 in 10 firms lack cyber insurance
New research published by the Law Society of England and Wales shows that 70 per cent of law firms have not purchased cyber insurance.
In a press release on 21 July, the Law Society said:
The Law Society is encouraging members to consider purchasing cyber insurance and has developed guidance online which helps members navigate the purchasing process.
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
Law Society President Lubna Shuja said: “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.
“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.
On purchasing PII, Lubna Shuja said: “Although stability is returning to the market, the process of buying PII has become harder – with more paperwork involved and underwriters showing greater aversion to risk. However, for those firms working in low-risk areas, the percentage increases are likely to be in the low single figures.
“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.”
On the risk level experienced by firms, Lubna Shuja said: “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.
“High staff turnover, larger numbers of fee earners and the amount of conveyancing work carried out could also result in much higher premiums.”