March 27 (Reuters) – Fast growth in data centre construction is pushing up insurance demand and risks for the sector, a report published by Swiss Re on Friday said.
Global insurance premiums linked to data centres are expected to rise to $24.2 billion by 2030 from an estimated $10.6 billion currently, the report said.
Noting that building costs for one site can exceed $20 billion, financing institutions are pressing insurers for limits that cover the full cost of construction, Swiss Re said.
However, the re-insurance and insurance industry can only support a fraction of this limit at competitive rates for traditional risk policies, Swiss Re added.
“This accumulation of value heightens the impact of physical risks, including natural catastrophes,” the report said.
Alongside natural catastrophes, there are also risks like water damage from cooling failures and breaks in power supply.
Swiss Re expects over a quarter of U.S. data centre capacity to be in areas with substantial exposure to hail fall and over 40% of capacity in areas significantly exposed to tornado risks.
(Reporting by Marleen KaesebierEditing by Dave Graham)