Arbol launches parametric insurance for gov-imposed data center construction moratoriums

Arbol, the technology-led underwriter of parametric risk transfer, climate, and weather re/insurance business, has designed a parametric product that aims to transfer the risk of government-imposed moratoriums on data center construction projects.

The parametric insurance is designed to protect against the regulatory risk of government halting or suspending data center construction as a class, rather than site-specific permit denials.

Arbol believes it to be the first insurance product designed to cover the regulatory risk that traditional insurance products typically miss and it will payout a predetermined amount if a covered action stays in effect past an agreed waiting period, with parametric trigger and settlement based on information from the public record.

Arbol’s new product is named Data Center Regulatory Moratorium Cover and it is seen as a beneficial addition to the data center insurance product complex, in being able to protect the capital already committed to a project and the carrying costs that can accumulate while construction efforts sit idle.

“Data center development has a new and fast-growing risk, and until now there was no way to transfer it,” explained Sid Jha, founder and CEO of Arbol. “A moratorium or construction hold can strand hundreds of millions in committed capital, and standard policies do not respond. We pay objectively when a government action halts a project, which turns an unpredictable regulatory exposure into one developers and their lenders can plan around.”

It’s a novel parametric risk transfer product, being focused on insuring a source of regulatory risk that traditional covers typically seek to avoid.

The company explained, “Regulatory risk of this kind has long been considered uninsurable. A government action produces no physical loss and has sat outside the reach of standard insurance, which has left developers to lobby it, litigate it or absorb it. Arbol brought the exposure into a transferable form by applying the specialty underwriting and alternative-capital capabilities it uses across other classes the market finds difficult to write.”

Arbol’s new parametric Data Center Regulatory Moratorium Cover is now available to data center developers through brokers, it may also be relevant to the investors or capital providers backing the artificial intelligence (AI) data center build-out.

Arbol noted, “The exposure is growing and has moved from state houses to county boards. State moratorium bills have drawn most of the attention and many have failed, while the binding constraints are local. As of August 2026 there were 45 state-level measures across 36 states and restrictions in 194 local jurisdictions. In a Gallup survey conducted in March 2026, 71% of Americans said they oppose construction of an AI data center in their own area, with 48% strongly opposed.”

Over the years we’ve seen a number of parametric risk transfer products that utilise trigger and settlement data from public record and government pronouncement. But this is the first time we’ve seen one focused on large-scale construction projects, which just serves to demonstrate how high-profile and in some cases contentious the AI data center build-out has become.