Insurance broker Marsh has launched a Cyber policy enhancementdesigned to protect against losses stemming from failure bycloud-service providers.

Marsh's CloudProtect acts as anadd-on to an insured's Cyber policy to address a company's relianceon vendors across the entire spectrum of operations.

“Cloud computing enables much more efficient computing bycentralizing storage, memory, processing and bandwidth—but it alsocan lead to network interruptions and lost income should the cloudgo down,” says Robert Parisi, Marsh's network security and privacypractice leader.

The CloudProtect solution helps to mitigate this risk byoffering additional protections that are not adequately addressedby traditional Cyber insurance policies, says Parisi.

The policy can be customized for each client based on itsexposures. Aside from covering lost income, Marsh says the policycovers costs associated with procuring services from a new cloudprovider as well as the costs involved in transitioning to the newprovider.

Marsh says the need for such coverage is growing. Citing a Ciscosurvey of 1,300 IT executives from 13 countries, the broker says itis estimated that by the end of the year, 20 percent of companieswill be using cloud-computing technology to deliver the majority ofthe software applications they use in their businesses.

Parisi says Marsh is working with leading Cyber underwriters onthis program and that limits on policies currently go up to $5million in capacity in the primary market, with limited additionalcapacity in the excess markets.

CloudProtect, he notes, will not be attractive to largeorganizations until the market for the coverage broadens to providemore than $100 million in loss protection. The program is currently“relevant to small and midsize companies (under $2 billion inrevenue), which rely more heavily upon cloud vendors and [so] wouldsuffer a more severe loss—relatively—than a larger company might,”he adds.