17 karma · joined March 20, 2012
Expect them to get ahead of this.
I believe that the time of cloud providers like Dropbox raking in profits, whilst accepting absolutely none of the liability is coming to an end.
Right now Dropbox has tens of millions of its customers who entrust some of their most valuable personal and business files to a cloud provider who does not give them an SLA and who fails to properly insure their customers against data loss, downtime or cyber attack.
It is one of the dirtiest secrets of cloud and something nobody talks about ever. I would argue that Dropbox is an accident waiting to happen and their customers will be left holding the can. Only a matter of time I believe.
The short answer is that compensation will be initially capped to a predetermined level, at least at first, because there is still so much that we cannot yet quantify properly.
The long answer is that insurance is based on the notion that we as cloud insurance providers can properly and accurately calculate the costs of certain events (data loss/downtime) happening on a group basis for a corporate consumer. But it's really hard to calculate the costs on an individual basis, so asking an individual consumer to quantify their estimated losses for the downtime/data loss they have experienced is always going to make everybody's headache, you can imagine the calls with the loss adjusters.
As cloud providers (both founders are cloud providers), we know exactly how much downtime, data loss we have suffered from historically, I consider this inside information almost, but it's not enough data.
We can also scrape the interwebs for any publicly available information on critical events occurring, we can gather as many data points as we possibly can, but ultimately it is still not enough to provide us with the risk visibility that we need to properly start calculating costs to an individual level, we need more data and lots of it.
Only when we have large pools of insured cloud consumers to measure over a period of time, will we begin to become properly informed on the true costs of downtime, data loss and cyber-attack on a group and individual basis.
Eventually, I can see cloud insurance becoming just another form of insurance like any other, the risks understood and quantified accurately on a group basis, but we still have a long way to go until we get there.
For the foreseeable future, expect capped compensation and plenty of data gathering from the emerging cloud insurance industry.
It’s a brand new field of insurance, we have yet to work everything out properly to the point where we understand it at scale, but we are making great progress and I think we have a head start on the traditional insurance industry being cloud providers and industry insiders.
I hope that I answered it to your satisfaction, I was really hoping somebody would post about us here so we could get the really hard questions we are looking for, HN is the place I come to feel stupid and if anyone asks us the hard questions, I knew it was going to be you guys.
Its a problem. When things go wrong and your customers get hurt, you should be doing more than giving them more of your services for free.
It is absolutely real and I personally believe that the lack of cloud insurance in the cloud computing world is a scandal waiting to happen. Dropbox and Box have tens of millions of customers between them, but they fail to offer a proper SLA to most of them or protect them against worst case scenarios properly by insuring against the obvious risks.
Think about that, millions of small businesses with their files in the cloud, but no protection against worst case scenarios. Its a problem guys, we are going to try and fix it.
Am just about to begin an IAmA on reddit if you fancy joining me there : http://bit.ly/redditor
Or follow my updates on twitter about this :
https://twitter.com/#!/Guise_Bule
OR go read my blog post : http://bit.ly/MicroFap