The Data Center Insurance Boom: Understanding the Claims Challenges Ahead

Artificial intelligence is driving a rapid expansion of the physical infrastructure needed to support it. Data centers now under development are larger, more valuable and more complex than earlier facilities. Global insurance premiums associated with data centers are projected to rise from approximately $10.6 billion to $24.2 billion by 2030. ¹

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The insurance opportunity is substantial, but the resulting losses may cross several policies, involve many parties and extend well beyond the damaged property. Claims organizations will need a clear view of the full exposure and a coordinated response.

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Key Takeaways

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• Individual data center campuses may contain tens of billions of dollars in buildings, computing equipment and supporting infrastructure.
• A single fire, power interruption, cooling failure, cyberattack or severe weather event can lead to property, equipment, business interruption, liability and reinsurance claims.
• Early coordination can improve causation analysis, reserving, loss measurement, vendor oversight and recovery efforts when several claims arise from the same event.

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An Insurance Market Taking Shape

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Some hyperscale data center projects cost more than $20 billion to construct. Their value increases once servers, graphics processing units and other technology are installed. Swiss Re reports that some campuses could cost as much as $50 billion to replace. ² Construction also brings exposure to faulty workmanship, contractor performance, fire, natural hazards and delays. ³

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Lawrence Berkeley National Laboratory estimates that data centers could account for 11.8% of U.S. electricity use by 2030, with possible outcomes ranging from 9.5% to 15.3%. ⁴

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Data Center Losses: Concentrated Locations, Interconnected Risks

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A hyperscale data center depends on interconnected computing, cooling, electrical, battery, telecommunications and security systems. Failure in one can quickly affect the others.

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Access to land, electricity, water and telecommunications encourages data center development in clusters. Texas and Virginia account for more than 40% of current and planned U.S. capacity. ²

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Swiss Re also estimates that approximately 40% of U.S. capacity may be located in areas with meaningful tornado exposure and more than one quarter in areas with elevated large hail exposure. ¹ A regional event could therefore damage several facilities and their shared infrastructure, while large roofs and sensitive equipment can make even limited water intrusion costly.

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A 15-year FM loss review cited by Swiss Re found that fire accounted for 10.9% of data center loss events and 42.3% of loss costs. Liquid damage represented nearly 24% of loss costs. ¹ Lithium-ion backup batteries and direct-to-chip liquid cooling introduce additional sources of fire and water damage.

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Power remains a central source of interruption. Uptime Institute reports that system complexity, grid instability and external dependencies continue to shape outage risk. ⁵ On-site generation and battery storage can reduce reliance on the grid while adding operational and fire exposures.

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PASTE IMAGE 1 (image1.png)

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Source: Alan Gray analysis based on Swiss Re Institute, Allianz Commercial and Uptime Institute. ^{1, 3, 5}

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One Event, Multiple Claims and Policies

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A major loss may involve the owner, operator, tenants, cloud providers, contractors, equipment manufacturers, utilities and maintenance vendors. Coverage may be spread among property, builders risk, equipment breakdown, cyber, liability and business interruption policies.

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Swiss Re warns that insurers may receive different portions of the same data center risk through separate placements. ¹ Related claims could then be opened and reserved independently even though they arise from one event.

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Early coordination can establish causation, identify responsible parties, support consistent reserving and provide timely notice to reinsurers. Engineers, adjusters, forensic accountants, counsel and technology specialists may all participate, making clear responsibility for decisions and documentation important.

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Critical Infrastructure Raises the Stakes

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Data centers support cloud services, financial activity, communications and government operations. Their growing importance increases the potential consequences of cyberattacks and physical disruption, while internet-connected controls for power, cooling, monitoring and security create additional points of exposure. Data center operators and insurers therefore need strong physical security, incident response and continuity plans. ¹

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The Business Interruption Challenge

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The financial loss from a data center outage may exceed the physical damage. Lost rent, service revenue and customer obligations can be compounded by the cost of transferring workloads, securing temporary capacity and operating backup systems. ²

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Loss measurement depends on contracts, operating data, capacity utilization and mitigation efforts. Service-level penalties, technology upgrades and projected growth require separate evaluation, while saved expenses and revenue from alternate facilities must be considered. Long replacement times for transformers and other specialized equipment can further increase the claim. ²

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How Alan Gray Can Help

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Complex data center losses require clear oversight across policies, claim files and service providers. Alan Gray helps insurers, reinsurers, captives and other organizations that retain risk:

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• Review claim handling, reserves and supporting documentation.
• Measure business interruption losses and identify unsupported or duplicate costs.
• Evaluate TPA performance, legal expenses, subrogation opportunities and reinsurance recoveries.

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Citations

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1. Jonathan Anchen and James Finucane. "[Insuring AI: Data Centre Value Accumulation Risks](https://www.swissre.com/institute/research/sigma-research/sigma-insights-07-2026-insuring-ai-data-centre-risks.html)." Swiss Re Institute, March 27, 2026.
2. Swiss Re Institute. "[Global Investment Boom Could Create USD 200 Billion Commercial Insurance Opportunity amid Rising Accumulation Risks](https://www.swissre.com/press-release/Global-investment-boom-could-create-USD-200-billion-commercial-insurance-opportunity-amid-rising-accumulation-risks-finds-Swiss-Re-Institute/51a66f04-139f-4761-9446-38d87d416efe)." Swiss Re, September 5, 2026.
3. Allianz Commercial. "[AI and Cloud Computing Drive Global Construction Boom for Data Centers](https://commercial.allianz.com/news-and-insights/news/data-centers-construction-risks.html)." Allianz, November 6, 2025.
4. Sarah Josephine Smith et al. "[United States Data Center Energy Usage Report: 2025 Update](https://eta.lbl.gov/publications/united-states-data-center-energy-2025)." Lawrence Berkeley National Laboratory, June 2026.
5. Douglas Donnellan et al. "[Annual Outage Analysis 2026](https://intelligence.uptimeinstitute.com/resource/annual-outage-analysis-2026)." Uptime Intelligence, May 11, 2026.

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