The data centre build-out for artificial intelligence (AI) and hyperscaler infrastructure requires significant amounts of risk capital and is seen as an area of opportunity for the catastrophe bond, insurance-linked securities (ILS) and capital markets.
Data centre catastrophe bonds are being discussed and designed, while other data centre ILS arrangements are already being utilised.
Brokers and structuring agents are working to design risk transfer arrangements that can leverage the appetite of capital markets and ILS investors to bring large-scale insurance and reinsurance capacity to support the data centre infrastructure industries risk transfer needs.
Data centre cat bonds and ILS are anticipated to be used to cover peak natural catastrophe risk exposures, such as earthquakes and hurricanes.
While ILS capacity is also seen as viable for other exposures including business interruption covers, plus weather risk transfer arrangements are being utilised to cover exposure to other climate perils for data centre and other tech or AI infrastructure.
Read our data centre risk transfer news and analysis below, as well as insights on how cat bonds and ILS can play a role.
As per a new report from Ernst & Young Ltd. (EY), the reinsurance sector is entering a era of “latent market demand” where private equity and alternative capital providers are set to expand their presence by exploring AI-linked securities, cyber catastrophe bonds, and other innovative investment vehicles.
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As the insurance-linked securities (ILS) market continues to expand, Augment Risk is positioning parametric triggers not merely as a peripheral alternative, but as a central, diversifying asset class defined by its structural independence from traditional indemnity-based retrocession, a shift the firm believes is fundamental to unlocking the next phase of third-party capital allocation.
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CRC Group, a wholesale insurance services provider, is leveraging the insurance-linked securities (ILS) market to bring capacity to support data center capabilities, which comes as the firm has launched a data centers product on its Insurisk platform.
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As the insurance and reinsurance market responds to the growing risk capacity needs of the digital infrastructure and data centre build-out, collateralized insurance-linked securities and parametric risk transfer are playing a role in covering exposures such as correlated power grid events, according to Guy Carpenter’s Jeremy Goodman.
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With growing capacity demands within AI and other cloud computing services leading towards a surge in data centers, this rapid expansion also presents a clear role for insurance-linked securities (ILS) and the capital markets, according to broker Aon.
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As the catastrophe bond and insurance-linked securities market looks to build on its recent strong performance and capitalise on opportunities that are being presented, the need for the sector to do so in a sustainable way came into focus at our ILS NYC 2026 conference held in New York last Friday.
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In order for the global insurance and reinsurance industry to meet the significant risk capital needs of the AI infrastructure and data centre build-out opportunity, securitization and third-party capital are going to be critical, Dean Klisura, CEO of Guy Carpenter said today.
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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.
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Global insurance and reinsurance broking group Aon has reported that cedents benefited from favourable dynamics at the January 1st reinsurance renewals, aided by record levels of capital following another strong year for reinsurers, along with a benign 2025 Atlantic hurricane season which the firm says led to “competitive tension” in the market.
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Aon’s CEO Greg Case said today that he is hopeful the catastrophe bond his firm worked on for Jamaica will help the country in its recovery after hurricane Melissa. Case also discussed the opportunity to provide risk solutions to the massive hyperscaler data centre build-out, highlighting alternative capital as relevant here as well.
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