Descartes Underwriting has announced a new parametric product suite for data centres, providing flexible capacity of up to $140 million per policy against natural perils that threaten timely completion of construction, commissioning, and ongoing service delivery.
The growing capacity demands of generative AI and other cloud computing services has led to a surge in data centre investments, which reportedly hit $267 billion in 2025 and is poised to reach $700 billion by 2035.
According to Descartes, a provider of corporate parametric insurance and reinsurance solutions for climate and emerging risks, because huge, multi-building data centre sites host thousands of servers and critical power and cooling infrastructure, insured values can exceed a staggering $10 billion per hyperscale campus.
Further, operators are now expanding through so-called edge facilities, which are smaller sites located close to end-users in order to reduce latency, which Descartes says broadens the data centre asset mix.
In response to the data centre boom, Descartes has launched a flexible, parametric product suit designed to protect data centre lenders, investors, and operators globally against high severity, low frequency natural catastrophe losses during construction or operational phase.
Capacity of up to $140 million per policy for earthquake and hurricane risks is available for projects and operational data centres in the US.
Highlighting some of the benefits of parametric insurance for data centres, Descartes notes that such coverage can top up limits, fill monetary and temporal deductibles, and flexibly cover business interruption and non-damage business interruption, including behind-the-meter power plants. Additionally, parametric payouts provide immediate liquidity for delay in start-up related delays, covering financial losses caused by construction delays and supply-chain disruptions. Parametric solutions also deliver fast liquidity to support operators and lenders when service-level agreements are breached.
“Data centers lie at the core of the modern digital economy, and they demand an equally modern risk transfer solution. Our new set of parametric insurance products for U.S. data centers provides reliable, customized coverage which triggers when data center construction is delayed by a natural disaster–even without damage. It’s the right solution for our time,” said Daniel Vetter, Head of Americas at Descartes.
Sebastien Piguet, Descartes’ Chief Insurance Officer, commented: “Descartes underwrites peak peril risk with a highly scientific approach. We’ve worked with numerous data centers worldwide and their brokers to assess the impacts that various types of natural catastrophes are likely to have on operating data centers, as well as those under development, to provide owners, operators, investors, and tenants with an extension of their insurance which ensures such events do not cause sustained financial harm.”
As an example of how its parametric insurance might work in relation to data centres, Descartes highlighted how a flood event could force a data centre based in Northern Virginia, US, to shut down its cooling and electrical distribution systems. This would lead to minimal physical damage but high business interruption costs, including potential service-level agreement penalties for multiple tenants.
“With Descartes’ parametric Flood-at-Location product in place, such an event could trigger an almost immediate payment, with the amount based on recorded on-site flood depth,” said the firm.
The company’s parametric insurance products protect against property damage and non-damage financial losses arising from up to 20 perils, including severe convective storm (tornado), flood, hurricane, earthquake, extreme heat, and deep freeze.
