Insurance confusion: Common sense at a premium over back-up

Businesses who go the extra mile in ensuring their data is backed-up and secure are failing to enjoy benefits of lower business insurance premiums, according to recent research.

Many companies' disaster recovery strategies encompass practices such as offshoring, or moving offsite data in secure locations away from areas which have been identified as prone to natural disasters, extreme weather conditions or which face a risk of terrorist activities.

City firms, for example, have started using data centres in locations away from the heart of London to back up and store mission-critical data.

And yet research out this week has revealed that companies which take such measures get no break in their business insurance premiums and often pay the same as companies located in the same area with no such offsite disaster recovery policy in place.

According to the research conducted by data centre provider Global Switch, the majority of Europe's insurance companies don't take account of such measures. In the UK, 52 per cent of respondents said their insurer has no interest in issues such as where data is backed-up.

Locations such as Iceland, Scotland and other northern European sites away from financial centres such as Frankfurt, London, Munich and Paris are all proving popular.

Since opening a data centre in Scotland in late 2004, Aydin Kurt-Elli, CEO of business ISP Lumison, told silicon.com he has seen overwhelming interest in the facility which is filling up six months ahead of schedule and a second data room has been commissioned at the site outside of Edinburgh.

He said geographic "diversity" is vital in terms of making the right call for offsite back-up location, adding that companies should at least look to move their data 30 to 300 miles from their core operations depending on the nature of the threats they face. "Certainly 3,000 miles isn't the kind of order of magnitude we should be talking," he added.

Kurt-Elli said: "Companies aren't planning for what happens in the event of a nuclear bomb going off. If that happens they really aren't going to give a monkey's."

As such he said companies should balance cost of network capacity with threat assessment and a realistic idea of how far afield they need to look and not be drawn into the idea they must be thousands of miles away.

Companies such as law firms and financial services companies, which own highly critical data, are particularly ahead of the curve in adopting such back-up solutions, according to Kurt-Elli.

Alexander Eiríksson, CEO of Icelandic firm SecurStore, who provides a remote and offshore back-up service, told silicon.com: "The majority of companies need to do an offsite back-up."

While accepting nobody wants to over-hype the threat of terrorism or major disasters, Eiríksson said many companies, especially those with shareholders to satisfy, must be able to show proper planning and demonstrate that the business will weather everything that is thrown at it.

He said: "It is of course important these days to move data out of metropolitan areas."