The Solicitors Regulation Authority (SRA) has approved a new clause to be added to solicitors’ Professional Indemnity Insurance (PII) policies which will make it clear what cover is provided for claims for losses arising from cyber acts and infrastructure failures.
Subject to approval by the Legal Services Board (LSB), the new clause will be in place for renewals from early 2022. The move follows the Prudential Regulation Authority (PRA) and the Lloyds insurance market asking insurers to clarify the extent of cover provided for cyber losses within their PII policies. This was prompted by the growth of cyber liability insurance as a separate class of insurance, the desire to avoid conceptual ambiguity between the scope of cyber liability insurance on the one hand and PII on the other, and the practical issue of avoiding confusion and conflict due to overlap between the two insurances.
Paul Philip, SRA chief executive, said: “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.”
James Burgoyne, Divisional Director – Claims & Technical, Brunel Professions said; “The SRA’s move will not add any new cover to PII policies, as the new clause is primarily an exclusion, but it does clarify the extent of cyber cover provided. The protection offered by PII to client and third party claims against the firm remains, but the cover for the firm’s own losses is very limited. As such the consumer protection aim of the MTCs remains intact but firms concerned about their exposure to loss of own data, loss of own money or the costs of dealing with certain regulator required actions after a large scale personal data breach would be well advised to buy cyber liability insurance. Firms seeking such protection should take care to use a broker that is well versed in cyber liability insurance, and to clearly explain to the broker the type of risks for which the firm is seeking insurance protection. This is because there is significant variation in cyber liability insurance from policy to policy.”
Brunel Professions is a leading provider of professional indemnity insurance broking to the legal profession, and well versed in cyber liability insurance. To find out more call Mark Sommariva on 0203 475 3275.