Insurers face capacity strain as $300b data centre boom grows

Total insurable values per site can reach $20b to $30b, raising aggregation concerns.

Commercial and specialist (re)insurers should take advantage of the $300b investment in data centres, according to S&P Global Ratings.

The annual investment estimate could surpass by 2027.

These data centre projects involve a complex ecosystem of hyperscalers, developers and builders, utility providers, equity investors, and increasingly, public and private lenders, each with their own insurance requirements. 

"We expect capacity constraints to limit the industry’s ability to fully insure these hyperscale data centre projects, as total insurable values reach $20b to $30b per location," said S&P Global Ratings credit analyst Charles-Marie Delpuech. 

"How re/insurers manage concentration and aggregation risk due to the colocation of high-value assets and the interconnectedness of risks through the presence of multiple stakeholders will be a key consideration in our credit rating analysis," Delpuech added.

Additionally, the credit agency said (re)insurers started the year strong, and does not expect any rating impact in the near-term, as the size and limits of participating carriers' retained lines remain relatively modest.