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Re/insurers push for advanced PVT models for data center risks
Synthetik’s Tim Brewer said data centers are now viewed as specialized exposures because tail risks and dependencies like power, cooling, and network connectivity can drive losses.
As data centers have grown into critical infrastructure, Reinsurance News reports that insurers and reinsurers are seeking more sophisticated analytical models to measure potential losses tied to political violence and terrorism, or PVT risk. In an interview, Synthetik Chief Operating Officer Tim Brewer said the market’s view of data centers has shifted from treating them like standard property exposures to requiring more detailed risk analysis. He noted that insured values can be far higher than for a typical building of the same size, but the uncertainty insurers focus on is often in tail risks.
Brewer said data centers are complex assets to model for PVT exposures because threat profiles vary by region and because threats can interact differently with the site’s structure. He pointed to conflict affected parts of the Middle East, where scenarios can include drone and missile strikes, compared with other regions where threats may include strikes, riots, or civil commotion.
He added that modeling also needs to account for the data center’s dependencies, including power, cooling, and network connectivity, as well as the people that rely on the facility. Brewer said those interdependencies are key to understanding how losses might develop, given that data center internal equipment can be more sensitive to shock and vibration than typical property equipment.