The USI Affinity Lawyers' Cyber Liability Program

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USI Affinity Cyber Liability Program

 

Cyber Liability Insurance

Not all data breaches are malicious cyber attacks. A breach can be an employee error or even an internal system error. However, the consequences are the same and a response is required.

Did you Know – "47% of privacy breaches are the result of criminal activity, 25% employee error, and 28% are from system errors" (source - 2015 "Cost of Data Breach Study: Global Analysis", Ponemon Institute LLC, May 2015.)

While LPL insurance affords some coverage for cyber liability risks, there are limitations to the coverage provided by a law firm’s LPL policy. However, to trigger coverage under the law firm’s LPL policy, there must be an alleged "wrongful act" in the conduct of legal services (usually a negligence trigger). Law firms could, however, be liable for data or network security breaches even in the absence of a wrongful act, and the incident will not always be in connection with the provision of legal services for others (a breach of employee information, for instance).

Shifting your coverage to a dedicated Cyber Liability insurance policy offers several distinct advantages. Additionally, a dedicated Cyber Liability Insurance Policy helps, not only in response to a breach, but in prevention of one as well.

5 reasons all law firms should consider purchasing a dedicated cyber liability policy.

  1. Privacy Laws – 47 of the 50 States, D.C. and Federal Gov’t have privacy laws prompting notification if “personally identifiable information” that is not encrypted is lost, stolen or disclosed.
  2. Fines and Penalties – Failure to comply with the nationwide patchwork of privacy laws can lead to significant fines or penalties levied by state or federal agencies.
  3. Contracts – Increasingly, law firms have been required to carry cyber liability insurance to meet bank, government or client contractual obligations, especially with respect to clients that are deemed ‘business associates’ under the HITECH Act.
  4. Corporate Information – Firms that handle tremendous amounts of confidential corporate information may be sued by a client if this information (paper or electronic) is lost or stolen.
  5. Reputation – One of the most important assets of law firms is the trust of its clients. This trust can be damaged if the law firm experiences a data breach. If the data breach becomes public, the firm may need to engage a public relations expert to help restore and protect the firm’s reputation.

Cyber Risks For Law Firms

The reality is – In today’s business world, the question is no longer "if", the question is "when". When will your firm be the victim of a breach.

When it happens - Are you prepared? Many law firms believe that cyber liability risks are already covered by legal professional liability (LPL) or indemnity insurance. While LPL insurance affords some coverage for cyber liability risks, there are limitations to the coverage provided by a law firm’s LPL policy, and there are distinct advantages to shifting that coverage to a dedicated Cyber policy.

USI Affinity Cyber Solutions For Law Firms

To analyze our client’s business issues, risks and challenges, our Technology team leverages USI ONE®, a fundamentally different approach to risk management. USI ONE integrates proprietary business analytics with a network of local and national technical experts in a team based consultative planning process to evaluate the client’s risk profile and identify targeted solutions.

As a leading specialty broker for Law Firms, USI Affinity’s Cyber Practice has developed PrivaSafe, a proprietary Cyber Liability solution with NAS Insurance and a Lloyds of London syndicate. Our PrivaSafe Cyber solutions product can offer Law Firms the comfort of knowing how to manage and mitigate exposures, and in the event of a data breach, they are protected. Below are some of the coverage highlights our PrivaSafe Cyber Solution can offer your firm:

  • Full Limits on Privacy Breach Response, Voluntary Notification and Network Assets Protection. Privacy Breach Response Costs Outside the limit.
  • Broad Cyber Crime coverage that includes coverage for Financial Fraud, Telecommunications Fraud, and Phishing Attack Coverage.
  • BrandGuard coverage for lost revenue due to a damaged reputation from a Cyber Breach.
  • Policy language that includes a broad trigger for Network Asset Protection, including system failure and negligence.
  • Broad Coverage for data that is stored with a third party including, but not limited to, IT outsourcers and Independent Contractors.
  • Worldwide coverage - claims can be brought outside of the U.S.
  • Payment Card Industry – Data Security Standards endorsement available to qualified applicants. Provides $250,000 sub-limit for fines & penalties levied by an acquiring bank and also includes $50,000 for legal expenses.
  • Network Asset Protection’s policy trigger includes accidental damage or destruction, administrative and operational mistakes as well as computer crimes and attacks.
  • Property Damage exclusion does not include electronic data
  • Commercial and Corporate confidential information is covered
  • Acts committed by rogue employees are covered, as well as privacy claims from employees.
  • Multimedia Coverage includes liability assumed under contract.
  • Choice of Breach Response Vendors
  • Extended Reporting Period available up to 3 years

Claim Examples:

  • In early 2016, Russian hackers broke into the CPU networks of 48 of the most prestigious law firms in the U.S. In postings on the internet, the hackers have threatened further attacks on law firms. – "Hackers Breach Law Firms," WSJ, 3/29/16
  • According to Bloomberg BNA, 23% of law firms with more than 100 or more attorneys experienced a data breach in 2015.
  • In February 2014, every document on the network of a small law firm in Charlotte, NC was permanently encrypted by a ransomware program called Crypto Locker, which was delivered to the firm as an e-mail attachment. – "Law Firm Loses all Files to Crypto Locker Ransomware," ESecurityplanet.com, February 2014


For additional information – Contact Greg Cooke today:

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The USI ONE Advantage®

To analyze our client’s business issues and challenges, our property & casualty team leverages USI ONE®, a fundamentally different approach to risk management. USI ONE integrates proprietary business analytics with a network of local and national technical experts in a team based consultative planning process to evaluate the client’s risk profile and identify targeted solutions. Clients then receive tailored recommendations for improving their total cost of risk. To learn more about USI ONE and the USI ONE Advantage®, contact your local USI team today.

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