Insurance broker Marsh has launched a cyber-insurance-policy enhancement to deal with losses stemming from a failure of a cloud service provider.
The New York-based insurance broker, and subsidiary of Marsh & McLennan Co., announced yesterday that it has launched CloudProtect, which Marsh says acts as an enhancement to an insured’s cyber policy to address a company’s reliance on vendors across the entire spectrum of operations.
“Cloud computing enables much more efficient computing by centralizing storage, memory, processing, and bandwidth, but it also can lead to network interruptions and lost income should the cloud go down,” says Robert Parisi, network security and privacy practice leader for Marsh.
He adds, “Marsh’s CloudProtect solution helps to mitigate this risk by offering additional protections that are not adequately addressed by traditional insurance policies.”
The policy, which can be customized for each client based on its exposures, provides coverage for business-income loss resulting from an interruption in service from a cloud provider.
Aside from covering lost income, Marsh says the policy covers costs associated with procuring services from a new cloud provider and costs involved in transitioning to the new provider.
Marsh says the need for such coverage is growing. Citing a Cisco survey of 1,300 IT executives from 13 countries, Marsh says it is estimated that, by the end of the year, 20 percent of companies will be using cloud-computing technology to deliver the majority of the software applications they use in their businesses.
In an e-mail, Parisi says Marsh is working with leading cyber underwriters on this program, and limits on policies currently go up to $5 million in capacity in the primary market with limited additional capacity in the excess markets.
He adds that the program will not be attractive to large organizations until the market for the coverage broadens to provide over $100 million. The program is currently “relevant to small and mid-size companies (under $2 billion in revenue) who rely more heavily upon cloud vendors and who would suffer a more severe loss—relatively—than a larger company might.”
This article originally appeared on PropertyCasualty360.com, a sister site of Credit Union Times.