ASP group offers insurance boost

ASP group offers insurance boost

A professional trade group is in the throes of rolling out an insurance program designed to overcome one of the major remaining misgivings end-user companies have about application service providers (ASP) - their financial stability.

The ASP Industry Consortium insurance program will offer "protection against any of the risks to which [ASPs] could be exposed in the course of their business," said Paula Hunter, chairperson of the consortium.

The policy provides financial protection against liability for Web content, such as slander, invasion of privacy or copyright infringement, as well as an inability to supply services a customer expects.

The policy also protects ASPs in case of a computer attack and includes coverage of up to $US50,000 ($A97, 000) for public relations expenses to help rebuild the image of a failed ASP.

Many ASPs have gone out of business in recent months, Hunter said. But so many large companies are offering applications as a service that the old picture of the stand-alone, start-up ASP isn't accurate anymore.

"What we've found is most ASPs that did go out of business did so because they couldn't get funding or because they didn't have any customers. So the customer impact has been relatively low," Hunter said.

A new study by the consortium shows that about 8 per cent of companies surveyed use ASPs for one service or another.

The appeal of ASPs is broad, according to the study, which includes data from 1983 respondents at businesses in 17 countries. The percentage of companies surveyed who use ASPs is about the same no matter what business they're in, and the services they buy run a gamut so wide it's hard to identify a leading application.

Security and liability, handy hints

- The US insurance market is already quite advanced in terms of providing liability cover for integrators in the case of security breaches in a client's network.

- In Australia this concept is in its infancy and is not expected to take off for another 12 to 18 months.

- In the case of a security breach the greatest cost to the organisation is the cost of publicity and money lost through a drop in share price and diminished investor confidence. This loss far exceeds stolen assets; such as industry secrets or the man-hours required to re-establish and resecure the network.

- 2001 was the first year external security breaches outnumbered internal security breaches.

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