The global data centre insurance market is projected to more than double in value to over $24 billion by 2030 as surging investment in artificial intelligence infrastructure increases the scale, complexity and concentration of risks facing operators and insurers.
The market, currently valued at about $11 billion, is expected to expand as data centre capacity grows, insured values rise and facilities become increasingly dependent on power infrastructure, cooling systems, connectivity and high-performance computing equipment.
This is contained in the latest The Data Center Construction Boom: Risks and Claims Trends report by Allianz Commercial, which said the rapid expansion of data centres was transforming the facilities from conventional commercial real estate assets into critical infrastructure.
The report noted that comprehensive insurance coverage is increasingly becoming a prerequisite for financing large-scale AI infrastructure projects, with the construction cost of a single AI campus potentially exceeding $20 billion.
As a result, insurers are expected to face growing demand for integrated coverage spanning construction, engineering, property, business interruption, cyber and liability risks, as well as emerging exposures around energy resilience, operational continuity and technology.
The insurance opportunity comes against the backdrop of an unprecedented global data centre construction boom driven largely by artificial intelligence.
Annual investment in data centres is projected to rise from about $500 billion in 2024 to more than $1 trillion as early as 2027. The investment extends beyond server facilities to electricity generation, grid infrastructure, cooling systems, networking and semiconductor supply chains.
The United States and China are expected to account for about 62 percent of global data centre capacity additions through 2030, although investment is increasingly spreading to other regions.
In Europe, Germany, the United Kingdom and Ireland remain major data centre markets, while Spain, Finland and Denmark are expected to record faster expansion due partly to more favourable power availability and permitting conditions.
Across Asia-Pacific, excluding China, installed data centre capacity is projected to rise from about 9GW currently to more than 28GW by 2030, with Malaysia expected to record more than tenfold growth.
However, the rapid expansion is also exposing insurers and operators to significant climate-related risks.
According to the report, about 79 percent of global data centre capacity is located in areas facing elevated natural catastrophe risks, while 54 percent is exposed to chronic heat and drought stress.
The concentration of facilities in climate-exposed locations is particularly significant because some of the fastest-growing data centre markets are also vulnerable to extreme weather.
Acute exposure to flood, wildfire and wind risks is highest in the Americas, affecting about 86 percent of capacity, while chronic heat and drought exposure is greatest in Asia-Pacific, where 89 percent of capacity faces such risks.
Allianz said climate resilience therefore needs to be incorporated into data centre planning and construction rather than treated as an operational issue after facilities have been built.
The report also highlighted the growing physical constraints facing the sector, including access to electricity, grid connections, permits, specialised equipment and skilled labour.
In the United States, the construction industry is already facing shortages of skilled workers, creating additional pressure as developers race to build new facilities to meet demand from AI and cloud computing.
Fire drives severity while water damage leads frequency
The changing risk profile of data centres is also reflected in insurance claims.
Analysis by Allianz Commercial of data centre-related insurance claims found that fire was the leading driver of loss severity, accounting for more than half of approximately €700 million, or about $800 million, in losses analysed.
Natural catastrophe events ranked second in terms of severity, followed by wilful acts, including crime and cyber incidents, and power failure.
Water damage, however, was the most frequent cause of data centre claims, followed by wilful acts, fire and equipment breakdown.
Business interruption was identified as the primary driver of claims severity by line of insurance, highlighting the potentially significant financial consequences of downtime at facilities where customers and critical digital services depend on continuous operations.
The report noted that the risk is becoming more concentrated as hyperscale and colocation campuses become larger and more complex.
A single facility can contain multiple tenants, servers, construction activity, cooling infrastructure, power systems and other supporting utilities. This means one incident could generate claims across several insurance lines, including property, construction, business interruption, liability, cyber and financial risks.
Allianz cited cases in which damage to external cooling systems, fire caused by hot works and delays in starting operations following power disturbances resulted in individual losses ranging from $50 million to $100 million.
Thomas Lillelund, CEO of Allianz Commercial, said the transformation of data centres into mission-critical infrastructure meant that resilience would become increasingly important to the success of large-scale AI infrastructure projects.
He said access to power, reliable supply chains, robust construction controls, climate-aware site selection and insurance programmes that reflect the concentration of risks would be critical as data centres evolve beyond traditional data storage into high-performance computing facilities.
Christian Kolbe, global head of construction claims at Allianz Commercial, said insurers needed to consider not only the value of the physical data centre but also the concentration of assets and dependencies surrounding it.
According to him, power, cooling, batteries, fibre routes, testing and commissioning and business continuity planning should be considered as interconnected components of the overall risk.
He stressed that risk mitigation should begin during the earliest stages of planning and continue throughout the data centre’s lifecycle.
