However, I'd argue the ability to take legal action, would actually encourage service providers to diversify their own backup strategies and procedures. If a mistake becomes too costly to consider - I think less mistakes would be likely to occur.
And I have a feeling that this money does not necessarily go into making the product more reliable, but that it is used to buy a better insurance.
This conclusion assumes that the people running the business are capable of resolving such issues. If they are not, then all it does is put people out of business. Not everyone grows and adapts when faced with such pressures. Some of them just go extinct.
If a company can't be relied upon to look after my data - I want them to go out of business.