Data centres surge sparks insurance shake-up
Huge data centers built by technology companies now represent multibillion-pound investments. Their expansion, fueled by artificial intelligence and cloud services, is transforming how insurers assess and manage risk.
The move to AI-driven infrastructure has brought denser computing hardware and greater energy needs. These changes have altered the risk profile of digital facilities, according to a 2026 analysis.
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Patricia Kwan, a senior credit analyst at S&P Global Ratings, explained that risks are now tied to computing power, energy use, and how tightly facilities connect. That interconnectedness increases the chance of widespread failures if a single problem occurs.
Insurers see potential in this changing environment. New coverage options include policies for construction risks, project delays, service guarantees, shipping, and weather-based insurance. Kwan noted that insurability depends on expert underwriting, clear policy language, and available reinsurance.
Sam Tiltman, who leads digital infrastructure at Marsh Risk, said data centers have become a key focus for insurers. After speaking with over 25 carriers, he found many are rethinking how to support the digital economy. “The need is for more flexible capacity,” he said. “Insurers must collaborate to move beyond isolated product categories.”
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Chris Ives, a partner at Fenchurch Law, said disputes over data center risks are growing more complicated. The concentration of multiple customers in one facility, along with reliance on power and cooling systems, creates new vulnerabilities. “A major loss event is likely to test policy language and insurers’ willingness to pay,” he said.
Insurance solutions are evolving. Most major brokers and carriers now offer end-to-end coverage from construction to operation. Ives warned that classifying losses remains difficult. A single outage could be treated as property damage or liability, affecting coverage limits and exclusions. SLA penalties, which apply regardless of fault, are especially hard to insure.
According to S&P Global Ratings’ recent report, data centres could generate around $10bn (£7.9bn) in new insurance premiums this year. The insurability of emerging data centre risks depends on the development of specialised underwriting expertise for these complex assets.
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Alternative funding sources may also enter the sector. Traditional insurers, limited by fixed capital, struggle with projects that span multiple risk types. Tiltman said the answer lies in flexible capacity, allowing insurers to share resources.
The industry’s ability to address these challenges will shape its support for future digital infrastructure. For now, gaps persist, and the urgency to close them increases.
