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Data centers may be buying too much insurance, Willis warns
Willis, a WTW business, says the global market can offer up to $15 billion in capacity for large data center risks, but many buyers still struggle to model their true exposure.
Data center operators may be overbuying insurance relative to their actual risk, according to Willis, a WTW business, which warned that capacity for large-scale data center coverage is growing faster than the industry’s ability to quantify exposure.
Willis said the global insurance marketplace can now provide up to $15 billion in capacity for large data center risks, driven by surging AI and digital infrastructure investment. But the brokerage said risk profiles vary widely by factors such as site selection, power infrastructure, construction methods, operational resilience, supply-chain dependencies, climate exposure, and cyber vulnerabilities.
According to Willis, those variables are often underanalyzed even as buyers assemble larger insurance limits. Willis urged clients to use data-led analysis to quantify and differentiate exposure so coverage limits better match what needs protection.
Willis also argued that investing in resilience measures can reduce risk more effectively than simply increasing coverage. It cited project-level steps such as flood protection, wind resistance upgrades, seismic design enhancements, and wildfire mitigation, and said its work has helped improve credit and financing terms, enhance S&P ratings, reduce insurance limits where analysis supported it, and strengthen operational continuity planning through better-quantified downtime scenarios.