Last week Netflix told me I’d love the political satire Don’t Look Up. The promo reminded me of the challenge I face each time someone points to the sky when talking about the cloud. I have to stop myself explaining their third-party servers are right here on earth, maybe even deep under water, but probably pretty close by.

Almost everyone uses the cloud now. An MGA called Parametrix reported earlier this year that about a quarter of all business data is now stored in the public cloud, principally AWS, MS Azure, and Google Cloud Platform). About a quarter of computational workload is performed there, too. The numbers are rising rapidly. ResearchAndMarkets.com estimated last year that the market for cloud services in insurance will reach $32.2 billion by 2026, up from $16.6 billion in 2021.

Companies that still rely on towering IT behemoths in their own server room are typically either super tech-focused, or they eschew third-party data storage, computing power, and software delivery because of a misapprehension about security.

“We don’t want cloud storage,” a prospect told me, finger to the ceiling. “I prefer to keep our data safe on our own servers.”

That brought back memories of a flood at place I used to work. It happened when a construction crew smashed through a water main whilst digging foundations for a new building next door. We all had to go home, because our Policy Administration System was hosted on servers in the basement, which was now more like a swimming pool.

It got me thinking about the relative safety of data different storage locations. The cloud for sure offers reliability and affordability. Providers emphasize how third-party cloud usage can be managed dynamically to suit changing workload demands; companies on the cloud don’t have to support redundant server capacity, or worse, upgrade their servers quickly to support new business initiatives.

But how safe is the cloud? How reliable?

I remember a story about a hurricane hitting Puerto Rico. One of the big cloud services companies has a huge data centre there. In the aftermath of the storm they had to hire armed guards to make sure no one would break in to steal their electricity, because it was the only building around with back-up generators. Sure, no businesses in the area had juice to power their computers, so they didn’t really need their  bit of the cloud, but their data was secure, and it was available if  they did.

Parametrix reports that cloud outages do occur, but in the grand scheme of things, they’re pretty rare. The MGA also praises the enormous effort that public cloud providers have taken to ensure their services are not interrupted by the various calamities that can befall any business. They note that hurricanes Milton and Helene revealed the “remarkable resilience of the US digital infrastructure,” since none of the three majors experienced issues during these severe weather events.

When it’s working (which is almost all of the time), the cloud speeds up delivery for insurance companies, and reduces their time to market. Third-party cloud providers also offer greater security, more failsafes, and improved resilience. Of course I understand the concerns some people feel about putting their valuable, proprietary data into the hands of others, but using the cloud is a clear example of better results from outsourcing, including on safety. It’s like upgrading from under the mattress to a bank vault.

For companies in the insurance sector, there are almost no exceptions. The cloud is all upside.