The construction of data centres is accelerating at an unprecedented pace worldwide, driving a significant rise in both insurance demand and associated risks. According to a report published by Swiss Re on Friday, this rapid expansion is reshaping the global insurance landscape, as insurers face increasing challenges in covering the substantial costs of these advanced facilities.
The report forecasts that global insurance premiums linked to data centres will soar to $24.2 billion by 2030, more than doubling the estimated $10.6 billion recorded today. This growth reflects the sector’s rapid technological development and the enormous capital invested in large-scale facilities, with construction costs for a single site often exceeding $20 billion.
Financing institutions are increasingly pressuring insurers to provide coverage that encompasses the full construction cost. However, Swiss Re warns that the insurance and reinsurance industry is only able to offer a fraction of this coverage at competitive rates under traditional risk policies. This limitation highlights the need for innovative insurance solutions to accommodate the sector’s evolving requirements.
In addition to financial challenges, physical risks pose a significant threat. Natural disasters, including floods, storms, and tornadoes, as well as operational risks such as cooling system failures and power outages, can severely impact data centre operations. The accumulation of high-value assets in a concentrated area amplifies the potential impact of these hazards.
Swiss Re’s analysis highlights that in the United States, over 25% of data centre capacity is situated in regions with substantial exposure to hail, while more than 40% of capacity lies in areas prone to tornadoes. This distribution underscores the heightened vulnerability of critical infrastructure to extreme weather events.
Projected Data Centre Insurance Premiums
| Year | Global Insurance Premium ($ billion) | Notes |
|---|---|---|
| 2026 | 10.6 | Current estimated premiums |
| 2030 | 24.2 | Projected, representing more than double current value |
Key Physical Risks to Data Centres
| Risk Type | Potential Impact |
|---|---|
| Natural Disasters | Flooding, storms, hail damage, tornado impact |
| Cooling System Failures | Overheating of servers, data loss, operational downtime |
| Power Supply Interruptions | Disruption of services, economic and operational losses |
Swiss Re emphasises that the sector’s rapid growth, while technologically transformative, demands careful risk management and innovative insurance strategies. Traditional coverage alone may not suffice to safeguard the increasingly valuable and complex global data centre ecosystem. The report calls for collaborative solutions between insurers, investors, and operators to ensure resilience against both financial and physical threats.
As the digital economy continues to expand, the pressure on insurers will only intensify, making data centre risk management a critical component of global infrastructure planning and investment.