How Downtime Insurance Became a Thing
A single hour of downtime from mission-critical, third-party IT service providers can cost small and medium-sized enterprises tens of thousands of dollars, but traditional insurance often does not cover these significant losses.
Neta Rozy, Co-Founder of Parametrix, explains coverage that the managing general agency has designed to fill in a gap in traditional cyber policies for business interruptions at cloud service providers, and other third-party IT services that businesses rely upon. The Parametrix coverage can kick in as soon as an hour after the start of a downtime event, with no cash deductibles, and provide payouts for outages lasting 12-24 hours—the point at which traditional cyber policies kick in, she said, explaining that the payouts are possible because the InsurTech has built a system that independently verifies uptime and downtime for the cloud and other enterprise technologies.
That’s why the founders of Parametrix Insurance came up with the idea to cover clients for short-term cloud outages, network crashes and platform failures that last up to 12-24 hours. Its products are designed to close a vital business interruption protection gap by using parametric triggers that pay by the hour.
“The product was conceived with the understanding that everything was moving to the cloud, and the cloud was becoming the right place for businesses of any nature to house and process data. But at the same time, there were associated perils—like downtime—that were excluded and restricted from most policies, creating a huge coverage gap,” according to Neta Rozy, co-founder and chief technology officer of Parametrix Insurance, a New York-based managing general agent.
“We were surprised that this risk wasn’t covered before we started operating in this space. But as we built out our product, we better understood the reasons why and structured the company and our solution to make it possible,” she said.
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