Cybersecurity and data privacy remain a growth area as ransomware and data breaches continue to threaten businesses, healthcare providers, and government agencies on a daily basis. The potential to get on a cybersecurity insurance panel continues to expand since I wrote on this topic in a January post titled, “Cyber Insurance Panel Potential.” As the number of cyberattacks increases, the likelihood of first party as well as third party cyber claims also rises.
In an article titled, “Cyberattacks 2022: Key Observations And Takeaways,” Forbes Magazine reported that “cyberattacks in the first half of 2022 rose by 42% compared to 2021.” The increased risk may be attributable to companies utilizing cloud-based services as the hybrid and remote roles continue to increase.
Despite this increase in cyberattacks, the Wall Street Journal reported in an article titled “Hot Market for Cyber Insurance Begins to Stabilize,” that the cyber insurance market has begun to level out. This follows significant increases in cyber insurance premiums of 34% or more in 2021. Indeed, CNBC reported “cyber insurance premiums increased by an average of 28% in the first quarter of 2022 compared with the fourth quarter of 2021.”
With the growing threat of cyber-attacks, companies that may have cancelled their policies last year or reduced coverage for cyber insurance may look to reapply for coverage this year or increase their policy limits now that the market looks to be stabilizing. As business technology systems become more pervasive and sophisticated, more entities are considering cybersecurity as part of their risk management plan to cover losses resulting from data breach, potential lawsuits, and operational down time.
Law firms that have been working as defense counsel on cybersecurity insurance panels could use their experience in defending claims to demonstrate their leadership by speaking at conferences and consulting with businesses in need of legal advice on key provisions that should be included in cyber insurance.
Insurance defense law firms could also advise corporate and other clients on the application process as the prospective insured completes detailed questionnaires regarding their information technology (IT) policies and procedures. Cybersecurity lawyers help a business to obtain the right type and amount of coverage, while also evaluating any insurance policy limitations or exclusions.
Some cyber insurance carriers may require a more rigorous application process in which they undergo security risk assessments. To offer an example, the Big 4 accounting firms offer their services to audit businesses and to assess their vulnerabilities. While this helps a company to understand their specific needs and helps them identify ways to mitigate the risks, cyber risk assessments can be quite costly especially for a small or mid-size business. For one thing, the cost depends on whether a business wants just a defensive assessment or a comprehensive assessment that includes an evaluation of both the offensive and defensive protocols. Then, for larger companies, the number of users and office locations could further increase the cost of the security assessment.
Having a cybersecurity lawyer involved in the risk assessment process can help business navigate the application process and perhaps more importantly, reduce potential liability. Furthermore, they can review contracts with insurance carriers and clients. They can review corporate policies and procedures to maintain compliance with government regulations and to protect the security of sensitive client information. Cybersecurity lawyers may even be able to help their clients set up the infrastructure to prevent a data breach.
Cybersecurity within the Law Firm
Cybersecurity continues to be a major concern for BigLaw firms, insurance defense firms, and others. Insurance companies often emphasize the importance of cybersecurity measures for panel counsel members. Inadequate cybersecurity may cause a law firm to risk valuable panel counsel appointments. See our 2018 article titled, “Law Firm Cybersecurity Risks.”
Insurance Defense Marketing Consultant for Law Firms
For defense counsel that want to explore cybersecurity insurance panel opportunities, now is a good time to do so. If your insurance defense law firm is asking how you can diversify your practice areas, we can help you market and develop your business into the area of cybersecurity insurance panels. In addition to law firms, we have also assisted several cybersecurity service providers in connecting with cybersecurity litigation panel managers.
If you want to improve your marketing communications and business development efforts, give us a call. We have helped almost 250 insurance defense law firms in 43 states pursue new client opportunities.
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.