On one hand, these cloud providers have the resources to protect themselves. On the other hand, larger cloud providers have become targets due to their concentration of data.

"Most of the cloud events we've seen have not been attacks, per se," says Stransky, "They've been much more related to accidental, environmental or structural issues. But, I'd imagine we'd see an attack at some point."

Many individuals and companies will feel the direct impact of a cloud service provider falling victim to a cyber attack.

"It will be a catastrophe just like a big hurricane or earthquake when one of those clouds fail," Stransky added.

Related: Cyber hacks cost up to $109 billion in 2016, U.S. estimates

While large companies tend to be the target of highly sophisticated attacks, they often have adequate coverage in the event of an attack — unlike their smaller counterparts. (Photo: Shutterstock)

Insuring the cloud

While the insurance industry's appetite for cyber coverage has grown in recent years, insurers are missing key opportunities.

Stransky says the insurance industry needs to "start coming to grips with" the fact there a number of ways to use the cloud. He added that insurers should be asking more detailed questions they should be asking at the time of underwriting.

While large companies tend to be the target of highly sophisticated attacks, they often have adequate coverage in the event of an attack. Unlike their smaller counterparts — which can have takeup rates in the single digits — these companies falsely believe they're not likely to be attacked or credit a lack of resources to explain why they don't have coverage.

Stransky believes small and midsize businesses often need cyber coverage for cloud enterprises more than large businesses for two reasons.

First, they likely lack a comprehensive IT staff equipped to prepare and handle an attack. Secondly, if they attacked successfully, the cost of an attack can be more than year's worth of revenue — even more than several years worth of revenue.

"They simply can't handle that today without cyber insurance. They would literally fold," says Stransky.

Second, the cloud was never designed to be a failsafe against cyber attacks. Like all other technologies, humans are behind the scenes running the show — which leaves room for errors and losses to occur.

How companies protect their data going forward remains up in the air, but for now, they can continue to upload their data to the cloud.

Related: Playing it safe: Cybersecurity for small- to medium-sized businesses