Parametric specialist Descartes unveils catastrophe product suite for data centres

Descartes Underwriting, a specialist underwriter of parametric risk transfer opportunities, has unveiled a new parametric product suite for data centres, providing flexible capacity of up to $140 million per policy against natural perils that threaten timely completion of construction, commissioning, and ongoing service delivery.

Increasing demand for capacity in generative AI and various cloud computing services has resulted in a significant rise in data centre investments, which are said to have reached $267 billion in 2025 and are expected to climb to $700 billion by 2035.

As Descartes explains, with large multi-building data centre sites accommodating thousands of servers along with essential power and cooling infrastructure, insured values can wind up surpassing an astonishing $10 billion for each hyperscale campus.

At the same time, the firm noted that operators are also expanding through so-called edge facilities.

These are significantly smaller locations situated near end-users in order to reduce latency, which according to Descartes, widens the data center asset mix.

In response to this market boom, Descartes has now launched a flexible, parametric product suite designed to protect data centre lenders, investors, and operators across the globe against high severity, low frequency natural catastrophe losses during construction or operational phase.

The firm also noted that capacity of up to $140 million per policy for earthquake and hurricane risks is available for projects and operational data centres located in the United States.

Descartes’ parametric insurance products protect against property damage and non-damage financial losses arising from up to 20 perils, including severe convective storm (tornado), flood, hurricane, earthquake, extreme heat, and deep freeze.

Daniel Vetter, Head of Americas at Descartes, commented: “Data centers lie at the core of the modern digital economy, and they demand an equally modern risk transfer solution. Our new set of parametric insurance products for U.S. data centers provides reliable, customized coverage which triggers when data center construction is delayed by a natural disaster–even without damage. It’s the right solution for our time.”

Outlining some of the key benefits of parametric insurance for data centres, Descartes explains that such coverage can top up limits, fill monetary and temporal deductibles, and provide flexible cover for business interruption and non-damage business interruption, including behind-the-meter power plants.

The firm also noted that parametric payouts provide immediate liquidity for delay in start-up related delays, which covers financial losses that are caused by construction delays and supply-chain disruptions.

As well as this, parametric solutions also provide quick liquidity in order to help support operators and lenders when service-level agreements are breached.

Providing an example of how its parametric insurance might work in relation to data centres, Descartes explained how a flood event could force a data centre that’s located in Northern Virginia, US, to shut down its cooling and electrical distribution systems, resulting in minimal physical damage but high business interruption costs, including potential service-level agreement penalties for multiple tenants.

“With Descartes’ parametric Flood-at-Location product in place, such an event could trigger an almost immediate payment, with the amount based on recorded on-site flood depth,” Descartes said.

Sebastien Piguet, Descartes’ Chief Insurance Officer, said: “Descartes underwrites peak peril risk with a highly scientific approach. We’ve worked with numerous data centers worldwide and their brokers to assess the impacts that various types of natural catastrophes are likely to have on operating data centers, as well as those under development, to provide owners, operators, investors, and tenants with an extension of their insurance which ensures such events do not cause sustained financial harm.”