A new insurance product, which combines cyber and crime cover with professional indemnity insurance protection required by the SRA, has been created for law firms by Locktons. The new “interlocking” policy has been developed in a bid to respond to the growing threat to law firms posed by criminals as well as the need for law firms to protect their risk profile in response to the introduction of new regulatory obligations.
According to the British Chamber of Commerce, one in five businesses have been the victim of cyber attacks in the past year. Within an 18 month period, £85 million was stolen by hackers from law firms; three quarters of the cyber crimes reported to the SRA in 2016 were some form of “Friday afternoon fraud”, and £7m of client losses resulted from email hacks in relation to conveyancing transactions. The cyber cover offered under the new product includes protection for breach of privacy, business interruption, media risk, malicious code, cyber extortion and claims expenses. The new product covers funds held both in office and in client account from both external and internal threats, including cyber-related crime.
Until the introduction of the new product, law firms needed to take out separate policies to cover different risks. This led to the possibility of disputes between insurers as to which policy responds to a loss, and resultant delays for the policyholder. The new product aims to avoid this, and allows policyholders to report and deal with cyber breaches efficiently without needing to activate multiple policies.
It will be interesting to see the uptake of the new product, and whether similar interlocking/combined products will be created for other industry groups.