Data centres waste capital on oversized insurance towers

Early resilience investments can improve lending terms and protect operational continuity.

Data centre owners and investors are being urged to rethink their traditional approach to buying insurance, with warning signs that many firms are over-insuring due to a poor understanding of their actual risk exposure.

According to global insurance broker Willis, a WTW business, rapid growth driven by artificial intelligence has led developers and operators to focus on securing increasingly large insurance towers. 

Although up to $15b in insurance capacity is available globally for large-scale data centre risks, Willis warns that simply buying more cover does not guarantee better protection.

Risk profiles in the sector extend far beyond basic property values, varying significantly depending on site selection, power infrastructure, construction methods, supply chains, climate factors and cyber vulnerabilities. 

Willis advises companies to adopt a data-led approach to quantify these exposures across the full lifecycle of a project—from design to operation.

Prioritising risk engineering and resilience investments early in asset design can often mitigate danger more effectively than purchasing higher insurance limits. 

Incorporating protective measures such as flood defences, wind resistance, seismic design updates, heat adaptation and blast protection not only reduces unnecessary insurance spend, but also strengthens operational continuity and enhances credit terms with lenders and investors.

Lay See Ong, Digital Infrastructure Industry Leader for Asia at Willis, highlighted that expanding and power-intensive facilities are prompting firms across the region to reassess their dependency and interruption risks. 

Moving away from market conventions toward verifiable risk data allows stakeholders to align their coverage with true exposure levels, ensuring capital is allocated efficiently as digital infrastructure continues to scale.