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.
“They’re not just buildings, they are highly integrated systems where you have power, cooling, hardware, and software that all depend on each other,” Swiss Re’s Head of Engineering and Nuclear Jimmy Keime told Reuters.
However, the likelihood of a full loss is very low, he said.
The re-insurance and insurance industry can only support a fraction of the full costs at competitive rates for traditional risk policies, Swiss Re said.
“This accumulation of value heightens the impact of physical risks, including natural catastrophes,” the report said.
Could make up big part of natural catastrophe insured losses
Swiss Re expects over a quarter of US 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.
Alongside natural catastrophes, there are also risks like water damage from cooling failures and breaks in power supply.
A single risk location, or data centre, could today cause close to $10 billion in natural catastrophe losses, Keime said.
In 2025, total global insured losses from natural catastrophes were $107 billion, he noted.