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Data center cyber risk outpacing coverage due to controls gaps
Average individual ransomware attack costs rose 17% in the first half of 2025, raising the stakes for insurers underwriting data center business interruption risk.
Data center cyber submissions are increasingly failing to match the scale of today’s threats and operations, with insurance specialists warning that underwriting is moving faster than many policy wordings and security checklists. Insurance Business reports that as data centers evolve from colocation sites into hyperscale environments, the coverage and underwriting implications have not kept pace.
Novatae Risk Group’s Karen Kutger says one of the biggest challenges is catastrophic risk, including the potential exposure of massive volumes of data and cascading business interruption. She also highlighted that state-sponsored attacks add to that likelihood, and that large data centers will almost certainly be targeted, in turn shaping what brokers and clients should raise in risk conversations.
Underwriters are prioritizing dependent business interruption, according to the outlet, with a close focus on whether policy wording covers catastrophic events rather than only standard outages. Kutger said dependent exposure definitions need to be broad enough to reflect cascading risk, and that security controls have become a primary pricing driver in data center cyber, with controls producing up to 35% premium variation between comparable facilities.
The specialist also flagged gaps that can trigger underwriting friction even when submissions look complete on paper, including inconsistent multi-factor authentication enforcement and gaps in clients’ endpoint detection and response or mobile device management. She said carriers conduct external scans, and open remote access ports can raise friction, while encrypted backups that are disconnected from the primary environment are viewed as important.