Cover extension that compensates a company's business interruption loss caused by an outage at a cloud provider its activity depends on, with no property damage of its own.
The contingent business interruption clause for a cloud provider is a cover extension that compensates an insured company's business interruption loss caused by an outage at a third-party cloud provider its digital activity depends on, with no physical damage touching the insured itself. This cover addresses a now-structural reality: most companies no longer host their own infrastructure and depend on a small number of major cloud providers for their critical applications, so an outage at one of these providers can simultaneously interrupt the operations of thousands of clients without any of them suffering any physical loss at all. For the insurer, this clause shifts the risk analysis away from the insured's own physical site and toward that, often unknown to the end client, of its cloud provider and the precise technical architecture the service relies on. It also raises a major accumulation problem: a single event at a dominant provider can trigger simultaneous claims across a large number of unrelated insureds in the same portfolio, a very different risk from a classic business interruption confined to one isolated site.
On February 28, 2017, a mistyped command entered by an engineer during a maintenance operation caused an outage of Amazon Web Services' S3 storage service lasting roughly four hours, simultaneously interrupting thousands of client sites and applications that had themselves suffered no damage at all.
contingent business interruption, interruption fournisseur tiers, dépendance cloud assurance