On the feasibility of data loss insurance for personal cloud storage

Personal data are important assets that people nowadays entrust with cloud storage services for the convenience of easy, ubiquitous access. To attract/retain customers, cloud storage companies aggressively replicate and georeplicate data. Such replication may be over-cautious for the majority of data objects and contributes to the relatively high price of cloud storage. Yet cloud storage companies are reluctant to provide costumers with any guarantee against permanent data loss. In this paper, we discuss the viability for cloud storage service to provide optional data insurance. We examine major risks associated with cloud storage data loss and derive a crude model for premium calculation. The estimated premium level (per unit declared value) in most scenarios is found significantly smaller than that accepted in mature businesses like shipping. Therefore, optional insurance can potentially provide cloud storage services with more flexibility and cost-effectiveness in resource management, and customers with both peace of mind and lowered cost.