Businesses large and small have been moving to cloud services due to the benefits it has to offer: savings, security, agility and scalability. In fact, a Harvard Business Review survey recently found that 85 percent of companies have increased their “reliance on the cloud” in the past year, according to a recent Property Casualty 360 article.
The great migration to the cloud can benefit the insurance industry as well. While the risks associated with the cloud are different and have been a concern for underwriters, cloud services offer greater security capabilities and a significant reduction in overall risk. A common fear, however, is that one event could trigger cyber-attacks on multiple organizations, ultimately leading to multiple claims and potential bankruptcy for an insurance company. If carefully managed and properly understood, the transition to the cloud could lead to better protected data and lower cyber insurance premiums. If not, the interconnectedness of the cloud could create a risk aggregation parallel to the asbestos claims in the late 1900’s.
Nonetheless, cloud based services can offer risk reduction for insurers’ portfolios. The aggregation of risk is certainly a factor, but “security services have begun to use the cloud to collect and pool information from every server and workstation that runs their security software. The result is a real-time picture of the threat landscape across hundreds of thousands of systems,” the article explains. Additionally, cloud security can identify and identify and patch software vulnerabilities as quickly as they appear. They collect a massive amount of metadata and can stop a zero-day attack as soon as it surfaces. The consensus is that cloud based services offers a level of security that outweighs potential risk, both for companies and their insurers. While its reliability and the aggregation of risk remains a concern, cloud providers have become better secured and more resilient in comparison to traditional approaches to cybersecurity.