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Data center mega-projects are reshaping global reinsurance capacity needs
Lockton’s James Nelson said data centers valued at $5 billion to $10 billion are becoming more common, while global capacity available for such risks is about $15 billion to $20 billion, making placement structure and location critical.
The rapid expansion of data centers is pushing insurers to rethink how they place and structure coverage, particularly as individual projects can require billions of dollars in protection at a single location, according to Insurance Business. Lockton’s US head of Data Centers & Digital Infrastructure, James Nelson, said data center projects valued between $5 billion and $10 billion are increasingly common.
Nelson added that the available global insurance market may offer only about $15 billion to $20 billion of capacity, in some way, shape, or form. That scarcity, he said, increases the importance of how and where coverage is arranged, and can mean the biggest developments increasingly require help from reinsurers, insurance-linked securities investors and alternative risk providers, as well as carriers operating across multiple regions.
Insurance Business also reported that insurers need sharper visibility into how different parties own and insure components of a data center, noting that one carrier could cover the building for one client while another covers specific equipment such as GPUs for a different client. The result can be overlapping exposure at the same site that is not immediately apparent.
Finally, Nelson said the industry has not yet faced a catastrophic data center loss that fully tests policy language, contractual liability and claims allocation among owners, tenants, contractors and lenders. He pointed to additional complications from phased construction, where adjacent areas may still be under buildout while other sections are already operating, blurring the line between builders’ risk and operational property coverage.
Nelson also flagged persistent concerns around power access, including grid-connection delays and behind-the-meter generation, and noted that regulatory scrutiny has grown after headlines about New York’s moratorium, with similar restrictions potentially emerging in other major markets like Texas or Virginia.