Contingent business interruption (cloud provider)
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. It pays the insured's business interruption loss when a cloud provider its operations depend on goes down, with no physical damage at the insured itself. It answers a fact that has become structural: most companies no longer host their own infrastructure and run their critical applications on a handful of large providers. An outage at one of them can therefore stop thousands of clients at once, none of whom has suffered any physical loss. For the insurer, risk analysis moves away from the insured's site to that of its cloud provider, which the end client often knows little about, and to the exact technical architecture behind the service it uses. The clause also creates a serious accumulation problem. A single event at a dominant provider can trigger claims at the same time from many unrelated insureds in one portfolio, a very different risk from classic business interruption confined to one 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.
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