The data centres powering today’s AI infrastructure are growing in scale and complexity. Construction costs for a single location can reach $20bn and increase further once technology is installed, says Swiss Re Institute (SRI).
This accumulation of value heightens the impact of physical risks, including natural catastrophes, says SRI in a recent Sigma Insights report.
Capital spending for the “Big Five” cloud service providers, also known as hyperscalers, is now widely forecast to exceed $600bn in 2026, a 36% annual increase. Roughly 75%, or $450bn, of that spend is directly tied to physical AI infrastructure housed in large data centres, such as servers or graphics processing units (GPUs). The five hyperscalers are Amazon Web Services, Microsoft Azure, Google Cloud Platform, Meta, and Apple.
Insurance
Global insurance premiums tied to data centres are expected to rise to $24.2bn by 2030, up from $10.6bn.
(Re)insuring data centres at this scale is complex, both during construction and especially during the operational phase.
Demand for data centre insurance is driven by multi-billion-dollar financing needs. These create demand for very high insured limits for a single data centre location. Financing institutions demand limits that cover the full cost of construction, even as maximum probable loss scenarios are much lower.
The (re)insurance industry can only support a fraction of the coverage at competitive rates for traditional construction risk policies. Surety bonds on major builds and subcontractor default insurance are becoming increasingly important with this uptick in engineering complexity.
While construction risk is primarily about creating the asset (challenges include physical perils, subcontractor interdependencies, and delay), operational risk is about keeping a high-value, multi-tenant critical system continuously available. Once GPUs, tenants, and services are in place, both the value and operational complexity increase, making business interruption (BI), loss of rent, and service interruption critical.
Swiss Re also sees emerging exposure drivers in rising insured value on catastrophe-exposed locations.
Implications for underwriting and risk management
The data centre industry is evolving from a relatively low-hazard electronic equipment occupancy to complex, high-energy-density facilities requiring sophisticated, multi-layered protection strategies. In some cases, new infrastructure is rolled out before researchers have had the chance to fully assess associated hazards and before prescriptive regulations are available to mitigate them.
Insurers have deep experience with traditional data centres, but only a few large, next-generation facilities are fully operational yet, making empirical loss experience limited. In this environment, underwriting success depends not only on capacity, but on specialised technical assessment and disciplined accumulation management.
The authors of the report are Mr Jonathan Anchen, Head Market Intelligence, and Mr James Finucane, P&C Research Lead, of Swiss Re Institute. M