Artificial intelligence is driving one of the largest infrastructure investment cycles in decades. At the same time, according to the recent report "Allianz Commercial The data center construction boom: risks and claims trends", the rapid global expansion of data centers is ushering in a new era of construction, operational, climate, and insurance risks. Annual investments in data centers are expected to double from around USD 500 billion in 2024 to over one trillion by 2027. Investment opportunities extend far beyond server rooms, encompassing power generation, network infrastructure, cooling, connectivity, and semiconductors. According to Allianz Research, the USA and China are likely to account for approximately 62 percent of newly added global capacity by 2030, yet the next investment wave is taking on an increasingly global dimension. In Europe, Germany, the United Kingdom, and Ireland remain important markets, but faster growth is expected in Spain, Finland, and Denmark, where electricity availability and permitting conditions can be more favourable. In the Asia-Pacific region, excluding China, installed capacity is expected to rise from the current approximately 9 GW to over 28 GW by 2030, with growth in Malaysia expected to increase more than tenfold.
"AI is transforming the latest generation of data centers from a specialised real estate asset into business-critical infrastructure," says Thomas Lillelund, CEO of Allianz Commercial. "The investment volume is extraordinary as these centres evolve from traditional data storage to high- performance computing requirements. However, success will increasingly depend on resilience. This includes power supply, reliable supply chains, solid construction controls as well as climate-conscious site selection and insurance programs that reflect the accumulation risk. Indeed, comprehensive insurance coverage has now become a prerequisite for financing many large-scale AI infrastructure projects."
Resilience must be the focus of data center operations
The biggest challenges of the industry are increasingly physical and less financial in nature. Competitive advantages are increasingly dependent on access to power, network connections, permits, specialised equipment, and skilled labour. In the USA alone, the construction industry is facing a shortage of about 439,000 skilled workers, while an additional 349,000 workers could be needed by 2026.
Climate resilience is becoming an increasing strategic consideration and is no longer just a secondary operational aspect. Around 79 percent of global data centre capacity is already located in areas with an elevated risk of natural disasters, while 54 percent are exposed to chronic heat and drought conditions. Some of the fastest-growing markets for AI infrastructure are most exposed to climate risks, including Northern Virginia (USA), Johor (Malaysia), and Marseille (France). Acute threats from floods, wildfires, and storms are highest in North and South America, affecting 86 percent of capacity. Meanwhile, chronic heat and drought conditions are most pronounced in the Asia- Pacific region, where 89 percent of capacity is affected.
Global market for data center insurance to more than double by 2030
As data centers become an increasingly important part of infrastructure, comprehensive insurance coverage has become a prerequisite for financing many large-scale AI infrastructure projects. Construction costs for a single AI campus can exceed USD 20 billion. Insurance values also grow significantly following the installation of high-performance computers. The global market for data center insurance is projected to grow from the current around USD 11 billion to over USD 24 billion by 2030. This reflects the rapid expansion of capacity, rising insurance values, and increasing operational complexity. Demand extends beyond traditional property insurance to integrated solutions covering construction, engineering, business interruption, cyber, and liability insurance. At the same time, areas such as energy supply security, operational continuity, and technology risks are in focus.
Fire determines the severity of losses, water damage occurs most frequently
An Allianz Commercial analysis of claims in the industrial insurance sector related to data centers shows that fire is the main factor affecting the severity of losses, accounting for well over 50 percent of damages amounting to approximately USD 800 million. Natural catastrophes are the second most significant factor, followed by deliberate actions, including crime and cyber incidents, as well as power outages. Water damage is the most common cause of claims in data centers, followed by deliberate actions, fires, and equipment failures. Business interruptions are the main factor contributing to loss severity across insurance lines, highlighting the significant financial impact of operational disruptions.
The risk profile of data centers is changing as facilities become larger, more complex, and increasingly interdependent. Hyperscale and colocation sites can consolidate multiple tenants, construction work, servers, utilities, and on-site infrastructure within a physical or operational space. A single event can therefore trigger claims across property, construction, business interruption, liability, cyber, and financial insurance lines. Case studies from practice show that in hyperscale facilities, damage to external cooling systems, fire damage, and commissioning delays caused by power disturbances each resulted in damages on the order of USD 50 to 100 million.
"For insurers, it is not only the value of the building that is important but also the concentration of value and dependencies within and around the building. Power supply, cooling, batteries, fibre optic paths, test and commissioning phases, and business continuity planning are all part of the same risk picture. Effective risk mitigation must begin early and extend throughout the data center's lifecycle. Resilience must be incorporated into the earliest planning phase," explains Christian Kolbe, Global Head of Construction Claims at Allianz Commercial.
Press Contact:
Allianz Commercial
Andrej Kornienko, Regional Head of Communications Germany & Switzerland (GER/SUI)
andrej.kornienko@allianz.com, Tel. +49 171 4787 382
Allianz Suisse
Nadine Schumann, Media Spokesperson
press@allianz.ch, Tel. 058 358 84 14