As data centres evolve from modest builds into large complex multi-billion-dollar campuses, the insurance industry has been focusing on risk engineering, an attractive proposition that also prompts competitive rating structures, reports broking group Lockton.
A surge in new capacity and a sharpening focus on risk engineering are creating a “buyer-friendly” insurance environment, even as the scale of assets reaches unprecedented heights, Lockton notes in its recent Data Centre Market Update.
The growth of these high-density clusters brings challenges and “grey areas,” where traditional insurance coverage may fall short, the insurance broker highlighted.
Revenue loss from service-level agreement (SLAs) breaches remains a major gap, as traditional property policies require physical damage to trigger. This is driving interest in parametric solutions that pay out based on defined performance failures.
The growing value of customer-owned GPUs and AI hardware in data centres makes unclear loss/damage responsibility a major issue.
Lack of clear risk allocation risks complex lease disputes, supply chain interruptions, and broader community consequences following an incident. Clear risk ownership is therefore critical, according to Lockton.
As power demand accelerates, insurers are scrutinising how facilities secure resilient, scalable energy supply. Dual‑feed grid connections, alternative fuels, and on‑site generation are becoming central to underwriting discussions.
A distinct divide is forming between older, older co-location sites and newer, hyperscale developments. While established facilities face greater attritional risks, the rapid technological advancements pose a risk of obsolescence for new sites.
Losses in the sector remain largely attritional, driven by equipment faults, cooling issues, and electrical failures. Individually small, these events accumulate and shape insurers’ views on operational discipline.
Data centre business interruption (BI) costs often exceed physical damage expenses, even from minor incidents.
This financial imbalance requires rigorous examination of business continuity measures, including redundancy, defined recovery times, and robust incident-response planning.
In a bid to support the growth of AI and economic productivity, new regulations to designate UK data centre projects as ‘nationally significant infrastructure project’ (NSIP) are moving closer.
This means that, following approval, developers will be able to bypass certain local planning hurdles. The government is currently working to slash the consenting timeline for these projects from an 18-month average down to just 12 months, providing the certainty required for massive capital investment.
Another hurdle for UK data centre development, according to Lockton’s report, is an unforeseen legal complication: Rights of Light. An emerging issue as developers focus on “grey belt” or brownfield industrial land within urban areas.
Since data centres are massive, windowless structures, they risk infringing on the natural light elements of neighbouring residential buildings, Lockton explains.
Such disputes can lead to injunctions that halt construction entirely. To combat this, the broker notes, the industry is increasingly turning to bespoke insurance products to cover potential damages and keep projects on track.
Looking through the remainder of 2026, Lockton predicts that the industry will be focused on sustainability and future-proofing.
Sustainability will remain a central theme, with AI‑enabled optimisation offering new ways to decrease energy consumption and extend the useful life of assets designed to operate effectively over many decades.
At the same time, the pace of innovation in AI and computation hardware will challenge operators to future‑proof facilities while maintaining insurability.
