Data centre insurance market set to more than double to £17.8bn by 2030

The global data centre insurance market is expected to more than double in value to £17.8bn ($24bn) by 2030 as the rapid expansion of AI infrastructure creates new risks for insurers.

The market is currently worth around £8bn ($11bn), according to Allianz Commercial, with annual investment in data centres forecast to rise from around £370bn ($500bn) in 2024 to more than £740bn ($1 trillion) as early as 2027.

The UK is among Europe’s major data centre markets alongside Germany and Ireland, while further expansion is expected across the continent as operators seek access to power and favourable permitting conditions.

Allianz Commercial said data centres were increasingly moving from commercial real estate assets to critical infrastructure, creating growing demand for insurance across construction, property, business interruption, cyber and liability.

Thomas Lillelund, chief executive at Allianz Commercial, said: “AI is turning the latest generation of data centres from a specialist real estate asset into mission-critical infrastructure.”

He added that resilience would increasingly depend on access to power, reliable supply chains, construction controls and climate-aware site selection.

Climate exposure

The rapid growth of the sector is also increasing insurers’ exposure to natural catastrophe and climate risks, with around 79% of global data centre capacity located in areas exposed to heightened natural catastrophe risk.

Allianz said 54% of global capacity was exposed to chronic heat and drought stress, while acute flood, wildfire and wind exposure affected 86% of capacity in the Americas.

The changing risk profile of larger and more interconnected data centres could also increase the severity of individual claims.

Fire was the leading driver of loss severity in Allianz’s analysis of data centre claims, accounting for more than half of around £598m (€700m) in losses. Natural catastrophe was the second-largest driver.

Individual claims involving external cooling systems, fire and power disruption have resulted in losses of between £37m ($50m) and £74m ($100m), Allianz said.

Christian Kolbe, global head of construction claims at Allianz Commercial, said insurers needed to consider not only the value of a data centre, but the concentration of infrastructure and dependencies within and around it.

“Resilience must be designed in from the earliest planning stage,” he said.