Lloyds of London to Offer Open Source Insurance

darkworm writes "Lloyds of London, the world's oldest insurance house, is to offer indemnification for IP litigation worldwide according to the Channel Register: 'Lloyd's of London is close to offering independent insurance protection worldwide against potential IP litigation involving Linux and open source software. The financial services giant has agreed to take on the risk associated with open source, and is finalizing arrangements to work through Open Source Risk Management (OSRM) who will become Lloyd's sole U.S. representative.'"

Comments

Lloyds is not...

[Anonymous Coward]

...an insurance company, it provides a market place where several companies (or syndicates) can sell insurance.

But when can we get tiger-attack insurance?

[mcc]

For whatever reason, this is all I can think of right now.

Lisa: By your logic, this rock keeps tigers away.
Homer: Oh? How does it work?
Lisa: It doesn't work.
Homer: Uh-huh.
Lisa: It's just a stupid rock.
Homer: Uh-huh.
Lisa: But I don't see any tigers around here, do you?
    [pause]
Homer: Lisa, I want to buy your rock.

Re:But when can we get tiger-attack insurance?

[jesterzog]

I think the article sums up this area quite nicely:

Arguably, one of the worst-case scenarios is the so-called "colorable case" - where there is no substance to an IP claim, but a company is forced to waste millions of dollars to defend the claim or settles early for a large sum to make the case go away. The average US patent action is estimated to cost $2m, according to the American Intellectual Property Lawyers' Association.

I'm glad the author included this note. It indicates quite clearly why a lot of companies see it as being so important to be cautious of lawsuits. It's not the possibility of losing that matters, it's the cost of fighting. If the cost of fighting is more than a company can afford, it just make sense to settle, and then the overly litigous company wins. Even enlightened CEO's often want indemnification--not because they think a company like SCO has a hope of winning a lawsuit, but because they're concerned about how much it might cost if they're even targeted.

Personally I think there need to be some changes to the system so that those who abuse it in this way are penalised much more, and also more quickly. The fact that SCO was both able to be so noticed in the first place, and can even continue dragging its corpse around today to threaten people with its stench without the likelihood of serious charges being brought against it, its executives or its legal team, suggests that not quite enough measures yet exist.

Re:Lloyds history

[rstultz]

Lloyds has a three-hundred year history or ups and downs, it's the insurance industry (quite literally, the insurance industry was created out of Lloyd's, then a coffee house dedicated to maritime shipping).

While I don't doubt that Lloyds has problems, has had problems, will have problems, they are known as a gold standard. It's not a single entity, it's a market, much like the stock market. There are large syndicates, made up of names (investors) who are the ones who actually are taking the risk. Lloyds is the gold standard because they have shown time and time again that they will not allow themselves to go bust. In whole or part. If a syndicate can not pay it's liabilities, then Lloyds governing body pays, with all of the other names sharing the cost. It's expensive, especially considering that they are covering policies they aren't legally reponsible for. But it's worked for 300 years, I still have faith in them.

Also, the financial fraud/troubles your link points out are from 80s and 90s. Lloyds was either the largest or second largest reinsurer (the ones who actually had to pay) on the World Trade Center, and they paid that claim (billions), so I would assume they're not in that much trouble.

Ryan Stultz

Re:Smart Move?

[meringuoid]

Considering things really havent been truly tested, one bad judgement could cost billions..

Actually, this is a really positive sign. Lloyds of London know all about risk. They've watched the SCO circus go around and have concluded that

- SCO don't have a leg to stand on
- However, they've made some people think there's a risk
- Sell insurance
- Profit!

This is not quite as much a case of free money as the insurance policies you can buy against abduction by aliens, but it's pretty close...

Not just against SCO

[RAMMS EIN]

I know there are going to be lots of SCO-related posts here, but SCO, of course, isn't the only threat here.

Think of all the patents on multimedia. Are you sure your copy of MPlayer doesn't contain any patented algorithms?

How many people do you think have contributed to all the software on your machine? Are you sure none of them have accidentally or purposefully checked in code that someone else owns the copyright to?

Even if your system is completely clean, don't you think there would be corporations out there that would claim otherwise? Are you sure you can convince the court you're innocent when faced with that corporation's ingenious lawyers?

Doesn't this suck?

[visualight]

If a company has insurance wouln't that just make it more likely for them to get sued?

"There is a risk, but it's a material risk," Egger said of Linux and open source. "We are trying to make sure we are not exposing corporates to risk that makes using Linux uneconomic."

Or would the insurance company put up a good fight in court and maybe make suing companies that use Linux uneconomical?

Re:The end of OSRM?

[richg74]

From the article:

OSRM will assess both the risk of the software in use and the individual company, before passing on the risk to the appropriate insurance company on the Lloyds market. OSRM expects to announce the first customers this Fall, and will initially charge organizations $60 per server.

As the article summary indicates, OSRM is going to be the US agent for the insurance. Some arrangement like this was more or less inevitable if OSRM's insurance concept was going to work. OSRM itself almost certainly doesn't have the resources (read, deep pockets) to underwrite the coverage.