Cloud Outage Insurance: Everything You Need to Know
Companies collectively spent $61 billion in cloud infrastructure in Q4 2022, with more growth to come. However, companies are poorly protected from losses caused by cloud downtime.
“Cloud service providers often offer service level agreements (SLAs) that outline their commitments to service availability and performance,” Amir Kabir, general partner at AV8, told TechCrunch+. But while penalties are often involved in the event that agreed service levels are not met, they rarely cover the full losses that a cloud outage could inflict on your customers.
Case in point: After millions of websites went offline following a massive data center fire in France, a small online vendor complained to the press that its cloud provider, OVHcloud, was only offering it a coupon worth a few months of free hosting – around $30, when he estimated the actual damage to be closer to $2,000.
For eCommerce businesses large and small, it’s easy to see how cloud downtime can result in lost revenue. But cloud outages can have a negative impact on revenue for businesses of all kinds, whether through lost productivity or because they have their own service level agreements with customers to whom they may owe compensation.
The usual corollary to risk is insurance against it, but when it comes to cloud downtime, the insurance industry has yet to fully catch up.