Article ID: 53094c68657031834704e1910ed8e5b6feaa90a1b0f7a523eada9de59b3ec136
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In a new report, global insurance broker Howden has highlighted the growing risks facing data centres as their infrastructure rapidly expands, with particular emphasis on extreme weather, geopolitical conflict and liability. “The AI boom is fuelling huge investment in data centres globally but as our analysis shows, the risks associated with this expansion are wide-ranging and increasingly complex,” Edward Howland Jackson, Chief Commercial Officer of Global Specialty at Howden explained in the document. According to Howden, in the US, a significant number of major data centre hubs are located in areas highly exposed to extreme weather, while globally more digital infrastructure is being developed in areas affected by armed conflict. In addition, the fast pace of development is reportedly contributing to a sharp rise in legal disputes globally. “For data centre operators, developers and investors, understanding where these risks are concentrated is critical. The opportunity for the insurance market is not simply to provide more capacity, but to use data, specialist advice and risk transfer to help clients identify these exposures early and build greater resilience as the sector expands,” Jackson said. He continued, “Navigating this increasingly complex risk landscape requires specialist risk expertise and deep insurance market insight. Howden combines these capabilities with proprietary analysis to help clients understand and mitigate their exposures and deliver differentiated risk transfer solutions.” Expanding on the impact of extreme weather and its highly concentrated nature, Howden said that while 155 US locations hosting data centres have experienced at least one severe hailstorm or tornado over the past decade, just 20 of those locations account for around 80% of the data-centre square footage impacted. Howden added, “The massive scale of financial exposures demands resilient construction and design to make efficient use of the limited insurance capital available as the market scales. “US data centres that suffered at least one severe hailstorm or tornado in the past ten years generate roughly $16 billion in annual revenue. This is roughly the size of the 29-year-old global cyber insurance market and significantly larger than global data centre premiums.” Stuart Adam, Head of Natural Resources, Howden US, noted, “Being able to gauge exposure to severe weather means being able to make smarter decisions around site selection, risk mitigation and how insurance capital is deployed. Despite exposure to extreme weather, these ‘nat-cat’ prone areas are often chosen for access to power and space. “This need for power is also seeing data centre developers and owners across the US increasingly becoming power plant owners and managers in their own right. That creates a litany of new exposures that developers, investors and insurers need to understand long before breaking ground.” Elsewhere, Howden’s report highlighted the growing exposure of data centre infrastructure to geopolitical instability and conflict across the world. In 2025 alone, data centre space located within 10–15km of active global conflict zones was equivalent to ~60% of the total recorded across the previous five years combined. Howden said this shows how digital infrastructure has expanded in or near areas across the world affected by war. Howden went on, “For the insurance market, this convergence of physical and digital risk presents challenges around aggregation clauses and the boundaries between cyber, property and war cover. Addressing these exposures will require rigorous cyber-physical risk assessment and greater coordination of policy wordings across different classes of insurance.” On the liability front, the global brokers report suggested that legal risks are also growing as data centres become larger, more energy intensive and more visible to the communities in which they operate. Howden continued, “Major lawsuits and arbitrations involving data centres have more than tripled from four in the whole of 2021 to 14 in the first half of 2026, coinciding with the acceleration of AI-driven investment in digital infrastructure. “Planning, zoning and environmental disputes are the principal drivers of recent legal disputes, particularly around hyperscale and AI campuses. “Noise and nuisance complaints – including those concerning diesel generator emissions, water consumption and visual impact – have also become increasingly common. Together, these issues account for 78% of the growth in liability cases involving data centres over the past three years.” It seems clear that the rapid expansion of data centre infrastructure is creating a risk landscape that is becoming increasingly difficult to address through traditional insurance solutions alone. Howden’s findings underscore the importance of understanding and managing these exposures early as investment in the sector continues to accelerate. In related news, at RVS last week, Swiss Re said a global capital expenditure super-cycle, fuelled by surging investment in data centres, energy systems and other strategic infrastructure, could present insurers with one of the largest commercial property and casualty opportunities in decades.
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