Parametrix Insurance Services
Cloud Downtime Insurance
A booming market for internet commerce has left thousands of companies depending on cloud computing to keep their business running, while creating an exposure that until recently was left uninsured.
Even as cyber liability insurance has become more widely available, many businesses remain vulnerable to losses that would arise if the cloud goes dark, according to the developers of Parametrix Insurance LLC’s Cloud Downtime Insurance, a parametric product that is triggered if service is interrupted.
“Businesses lose billions of dollars a year,” because of cloud services downtime, said Neta Rozy, Tel Aviv, Israel-based chief technology officer at Parametrix.
Parametrix’s cloud downtime coverage is a winner of a 2021 Business Insurance Innovation Award.
“Anyone using the cloud in a mission-critical manner” has downtime exposure, Ms. Rozy said. Interest in the product, which was launched as a “proof of concept” in Israel and is expanding into the U.S., is strong from companies that include event-related businesses, streaming services, internet gaming sites and financial services companies, she said.
Parametrix developed the product with input from Tokio Marine Kiln Group Ltd., one of the insurers that underwrites the coverage, and specialist broker Howden Broking Group Ltd., the distributor of the coverage.
Luke Ogunlaja, London-based innovation underwriter with Tokio Marine Kiln, served as a mentor to Parametrix while the product was being refined in the Lloyd’s Lab, which helps startups create solutions that can bring value to the Lloyd’s of London market.
The coverage is triggered by an agreed period of downtime. Limits up to $1 million are available while the product is in its early stage, Mr. Ogunlaja said. “The intention is for us to closely monitor how this parametric insurance solution behaves, but more importantly for us to continuously learn from customer feedback before we consider offering larger limits to our clients.”
When coverage is triggered, the policyholder is asked to attest to its loss, and the agreed indemnity amount is paid. Claim notification is made simultaneously to the risk manager, broker and insurer.
Companies may need to rethink the structure of their cloud providers so that downtime in one region can be minimized by relying on service from another part of the world, Ms. Rozy said. “If we see that the customer has a higher risk of downtime, we share that information with them and a few tips and tricks on how they could add some redundancy and lower their risks.”