Data centre risk transfer news

With the global economy having entered a capital expenditure (capex) super-cycle, there is a notable increase in investments being directed towards AI data centres. According to reinsurer Swiss Re, this could be a US$200 billion premium opportunity by 2030, within which alternative reinsurance capital, including catastrophe bonds and sidecars is expected to play a key […]

Recognising the burgeoning interest in underwriting exposures related to the data center build-out, global data analytics and technology provider Verisk has announced the launch of a dedicated exposure database for these large risks in the United States.

Broker Marsh is aiming to bring alternative sources of insurance and reinsurance capital into the digital infrastructure risk transfer sector, through the launch of a $10 billion property insurance exchange named Stratus.

The global data centre insurance market is projected to grow from currently around US $11 billion to more than $24 billion by 2030, which comes as the market continues to drive an influx of infrastructure risks and opportunities, according to Allianz Commercial, the commercial insurance business of Allianz Group.

As the insurance-linked securities (ILS) and catastrophe bond markets continue to embrace artificial intelligence (AI), the technology has the potential to help expand the market into new sectors like data centre risks, according to Ethan Powell, Principal and CIO of Brookmont Capital Management.

Zurich, the European headquartered global re/insurance company, said this morning its has secured a significant $1 billion quota share reinsurance arrangement to support its growing business in underwriting data centre risks, while it has also broken out its US peak peril catastrophe reinsurance tower in its disclosures, now showing its recent catastrophe bond.

As data center exposure continues to grow, it is placing significant pressure on the insurance industry to address these challenges. In light of this, Jason Bolding from Gallagher Securities has emphasised that the growth will require a blend of traditional insurance, reinsurance, captives, catastrophe bonds, and sidecars to effectively fill the widening protection gap.

As the buildout of AI and digital infrastructure continues to expand across the re/insurance industry, driving insurance-linked securities (ILS) into this emerging sector relies heavily on key structural advancements, including the development of standardised parametric triggers and portfolio aggregation mechanisms, according to Michael Moloney of Oliver Wyman.

With capacity constraints likely to limit the insurance industry’s ability to fully insure hyperscale data centre projects, given their scale and complexity, a new report from S&P notes that this will drive greater use of self-insurance through captive insurers, and potentially, alternative capital such as insurance-linked securities (ILS).

A new analysis from Lloyd’s global specialist re/insurer MS Amlin has revealed that 56% of the 670 planned US data centre projects representing nearly $800 billion in investment, are located in states that are highly exposed to either hurricanes, severe convective storms, earthquakes or winterstorms.