Data Centres Straining Insurance Market as Risks Grow
· Business · Hindustan Times, The Economist
Global insurance premiums tied to data centres are projected to rise from $11 billion today to $24 billion by 2030, according to Swiss Re. The rapid expansion of artificial intelligence requires larger data centres, which complicates conventional risk models due to their vast financial scale and physical exposure to natural hazards like tornadoes and hail. Approximately 40% of America's data-centre capacity is located in zones vulnerable to such perils, often clustering in regions like Virginia and Texas. Additionally, underwriters are concerned about the internal layouts of these facilities, where power storage units and lithium batteries are placed in close proximity to expensive AI chips. This concentration of high-value assets increases the risk that a single battery fire could inflict substantial financial losses.
Why it matters
Data centre operators and global reinsurers face mounting financial risks and underwriting challenges as the concentration of expensive AI hardware and vulnerable locations drives up potential losses.
Read the original report — Hindustan Times
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