Kathmandu. The rapid expansion of artificial intelligence (AI) data centers is bringing a new wave of demand for commercial insurance. However, it is also focusing on risk in ways that challenge traditional insurance.
Projects are becoming larger and rely on reliable power, advanced cooling systems, and complex digital networks. This raises the question of whether insurance companies will be able to continue to maintain the scale and interconnected nature of this risk.
Gianfranco Lot, chief underwriting officer of Swiss Rima Property and Casualty Reinsurance, said in a recent report that the digital economy is now becoming a real economy. AI requires data centers, power grids, and more advanced infrastructure. All of which require insurance.
The Swiss Re Institute estimates that AI data centers and their associated renewable energy infrastructure could generate about $200 billion in commercial insurance premiums between 2026 and 2030.
According to Allianz Commercial Analysis, the U.S. and China are expected to account for about 62 percent of global data center capacity additions by 2030. Excluding China, capacity in the Asia-Pacific region is projected to increase from about 9 GW to more than 28 GW by the end of the decade. Malaysia is experiencing a 10-fold increase. Annual investment in data centers is projected to increase from about $500 billion in 2024 to more than $1 trillion by 2027.
The global data center insurance market itself could more than double from about $11 billion by 2030. That’s because operators seek coverage for construction, equipment failures, business interruptions, cyber, liability, and operational risks.
Allianz Commercial reviewed nearly $800 million in data center damage and found that fires accounted for more than half of the most serious claims. Then there are natural disasters, crime, cyber incidents, and power failures.
Swiss Relay warns that a single failure could affect many businesses. Because facilities often share electricity, telecommunications, cooling and network infrastructure. Replacing high-voltage transformers can take years, increasing downtime and losses. If the sector is to grow sustainably, operators will need careful site selection, strong construction controls, and adequate insurance to take climate risks into account. – Agency
