Open source risks now insurable

Summary:Real insurance, the kind of policies Lloyd's writes, is a form of gambling.

Lloyds BottlestopIt may sound silly, but Lloyd's of London is now willing to write policies against the intellectual property risks of open source software. (This Lloyd's bottlestopper is available for just 30 pounds, plus VAT and shipping.)

To understand why this is important, consider how the insurance business works. True insurance covers the unexpected.  Most medical insurance isn't really insurance per se, but a form of banking. We know you'll get sick (or at least be prescribed something to prevent it), so we estimate the costs and apportion them out.

Real insurance works differently. Real insurance, the kind of policies Lloyd's writes, is a form of gambling. A capital pool is created and risks are assigned to it. If there are no claims during the policy term, the investors get their money back, plus the premiums paid against it, plus any investment profits they can generate in the meantime. (On the other hand, risks can be unlimited, too.)

Before Lloyd's is going to write a policy, in other words, the chances of loss have to be pretty low.

Despite all the evidence found in courts so far, businesses are still being told there are risks to open source software. The point today is that smart money now knows how low those risks really are.

Topics: Open Source


Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994.

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