Artificial intelligence ( AI ) is driving one of the largest infrastructure investment cycles in decades, but the rapid global build-out of data centres is also creating a new era of construction, operational, climate and insurance risks, according to a recent report.
Annual investment in data centres is projected to double from around US$500 billion in 2024 to more than US$1 trillion as early as 2027, and the investment opportunity extends far beyond server halls to electricity generation, grid infrastructure, cooling, networking and semiconductors, finds The Data Centre Construction Boom: Risks and Claims Trends report published by Allianz Commercial, an arm of Munich-based insurance conglomerate Allianz.
The US and China are expected to account for around 62% of new global capacity additions through 2030, according to the report’s research, but the next wave of investment is becoming increasingly global. In Europe, Germany, the UK and Ireland remain major markets, but faster expansion is expected in Spain, Finland and Denmark, where power availability and permitting conditions can be more favourable.
Across Asia-Pacific, excluding China, installed capacity is projected to increase from around 9 gigawatts ( GW ) today to more than 28GW by 2030, the report notes, with Malaysia expected to grow more than tenfold.
Resilience central to operations
The sector’s biggest constraints, the report points out, are increasingly physical rather than financial. Competitive advantage is increasingly determined by access to electricity, grid connections, permitting, specialized equipment and skilled labour. In the US alone, the construction industry faces a shortage of around 439,000 skilled workers, while an estimated 349,000 additional workers may be needed in 2026.
Climate resilience is increasingly a strategic consideration rather than an operational afterthought. Around 79% of global data centre capacity, the report shares, is already located in areas exposed to heightened natural catastrophe risk, while 54% is exposed to chronic heat and drought stress.
Some of the fastest-growing AI infrastructure markets are also among the most climate-exposed, including those in Northern Virginia in the US; Johor, Malaysia; and Marseille, France. Acute flood, wildfire and wind exposure is highest in the Americas, affecting 86% of capacity, while chronic heat and drought stress is greatest in Asia-Pacific, where 89% of capacity is exposed.
Data centre insurance market to double by 2030
Insurance is evolving alongside the sector. As data centres assume a more critical role in infrastructure, comprehensive insurance cover, the report notes, has become a prerequisite for financing many large-scale AI infrastructure projects. Construction costs for a single AI campus can exceed US$20 billion, with insured values rising substantially once high-performance computing equipment is installed.
The global data centre insurance market, the report estimates, is projected to grow from around US$11 billion today to more than US$24 billion by 2030, reflecting rapid capacity expansion, rising insured values and increasing operational complexity.
Demand is expected to extend beyond traditional property cover towards integrated solutions spanning construction, engineering, property, business interruption, cyber and liability, while also creating new opportunities in areas like energy resilience, operational continuity and technology risk.
Risk, claims trends
Fire is the leading driver of loss severity, the report’s analysis of insurance industry data centre-related claims shows, accounting for well over 50% of around €700 million ( US$800 million ) worth of losses.
Natural catastrophe activity ranks second, followed by wilful acts, which include crime and cyber incidents, followed by power failure. Water damage is the most frequent cause of data centre claims, followed by wilful acts, fire and equipment breakdown.
Business interruption is the primary driver of claims severity by line of insurance, highlighting the significant financial impact of operational downtime.
The data centre risk profile is changing as facilities become larger, more complex and increasingly interdependent. Hyperscale and colocation of campuses can bring together multiple tenants, construction works, servers, supporting utilities and on-site infrastructure in one physical or operational space.
A single event, therefore, can trigger, the report warns, claims across property, construction, business interruption, liability, cyber and financial lines. Real-life claims case studies show that in hyperscale facilities, damage to external cooling systems, hot works-related fire damage and a delay in start-up caused by power disturbances have each resulted in losses in the US$50 million to US$100 million range.
Policy clarity essential
Data centre projects, the report says, encompass different project phases with several stakeholders and interests involved, which can create complications.
During the construction phase, stakeholders include the owner, developer, contractor and subcontractors, whereas in the operational phase, the stakeholders include the owner-operator and, potentially, multiple tenants or end users.
Different policies, for example, could respond to a hot works-related fire resulting in damage to a data centre nearing completion, and this would impact different stakeholders.
“Clarity is critical with an insurance claim,” says Charlotte Field, Allianz Commercial’s regional head of short-tail claims for Asia. “Clearly documented handovers are essential between your construction all-risk policy and operational policy. There must be no ambiguity about practical completion to avoid disputes over which policy responds to a particular event and the extent of cover.”
Thomas Lillelund, the company’s CEO, adds: “AI is turning the latest generation of data centres from a specialist real estate asset into mission-critical infrastructure. The scale of investment is extraordinary; and, as these centres evolve beyond traditional data storage to high-performance compute demands, success will increasingly depend on resilience: access to power, reliable supply chains, robust construction controls, as well as climate-aware site selection and insurance programmes that reflect the true accumulation risk.”
