NU Online News Service, Aug. 30, 3:45 p.m. EDT
What questions should insurance brokers and underwriters be asking customers about cloud computing and its impact on exposure and coverage?
In the lead article of this week's edition of NU's E&S/Specialty Lines Extra, Erich Bublitz, technology practice leader for ThinkRisk Underwriting Agency, explains the basics of cloud computing and addresses the implications of using cloud services to the technology errors and omissions and network security insurance landscape.
The term "cloud computing" refers to the practice of "outsourcing" a portion of a company's technology environment to a shared third-party environment. Although the terminology is relatively new, cloud computing is not an entirely new concept. In the past, similar offerings were known as "application service providers."
Common examples of cloud computing include Salesforce.com, a company that can fully host its clients' customer relationship management (CRM) needs, or Google's Gmail platform for businesses, in which the client's e-mail environment exists almost entirely within Google's systems rather than onsite at the business.
For many companies, services they can obtain through a cloud environment simply are not obtainable otherwise because it is too costly or complex a task to replicate those services internally. That means that most companies need to focus their energy not on debating whether to embrace the cloud model but rather on managing cloud computing appropriately so that the risks are mitigated, Mr. Bublitz notes in his article.
Still, many users of cloud computing services actually have their heads in the clouds--thinking that their security risks are transferred to the third-party service providers, Mr. Bublitz suggests, going on outline key principles of cloud security, including the purchase of E&O insurance as a final step.
The entire Aug. 30 edition of NU's E&S/Specialty Lines Extra e-newsletter-- also featuring articles on growing opportunities in the travel insurance market and environmental coverages required for large-scale cleanup efforts in the Gulf--is available here.
To sign up to receive the E&S e-newsletter in your inbox every two weeks, go to the e-newsletters link on National Underwriter P&C's website, www.property-casualty.com.
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