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Hyperscale data center boom strains insurance coverage as hazards rise
FM expects another US$6.5 trillion in US data center development commitments by 2030 as insurers and brokers struggle with escalating catastrophe, cooling, and supply chain risks.
A rapid global buildout of hyperscale data centers is concentrating major exposures to natural catastrophes, cooling failures, and fragile supply chains at a scale that the insurance market is struggling to insure, Insurance Business reports. FM said the construction rush stacks unprecedented values into single locations, including in secondary-peril areas, while aggressive timelines and long-lead specialized equipment complicate builders’ risk and business interruption assumptions. FM operations senior vice president of global growth strategies Achim Hillgraf said the insurer expects another US$6.5 trillion to be committed to data center development by 2030.
The magnitude of the exposure is far larger than traditional large infrastructure risk limits, according to S&P Global Ratings. It estimated total insurable values for a single hyperscale campus can reach US$20 billion to US$30 billion, including during construction, compared with typical limits of US$5 billion to US$10 billion for projects such as bridges or tunnels.
With cover becoming harder to find, residual risk is increasingly flowing back to sponsors and hyperscalers, often through captives. Moody’s insurance analysts noted that in March 2026, some investors including Blackstone reportedly passed on data center debt opportunities due to insufficient insurance, underscoring the potential knock-on effects for capital providers. In the US, Hillgraf highlighted secondary perils such as convective storms, hail, tornadoes, and wildfires as a growing driver of underwriting pressure.