Insurance Plan for Service Assurance in Cloud Computing Market with Incomplete Information

Nowadays, cloud computing has been identified as new opportunities for migrating to the expected agility, reuse, and adaptive capabilities that can support the ever changing IT trends and requirements. Unfortunately, the rapid evolution of those technologies also comes with open issues such as security, privacy, integrity, quality of services, and their possible detrimental consequences. In this work, the concept of insurance is introduced to compensate the cloud computing customers when encountering those failures if service providers (SPs) have insurance purchased. Particularly, we consider the situation when the insurer is unable to see the system failure risk levels of the SPs, which is usually seen as an incomplete information market, in contrast with the optimal situation in a complete information market. First, an insurance-based cloud computing architecture is proposed to build a monetary credit system in which the cloud computing SP pays a premium for a certain coverage to the insurer. Subsequently, problem is formulated to solve the optimal insurance plan in complete and incomplete information markets, together with detail analysis of insurance policies in both cases are provided. Furthermore, simulation results show the properties of the two insurance plans and parameters that affect the design of the insurance plan.