Data centre risks seen as growth opportunity for reinsurers
A new report outlines reinsurance opportunities made available by advances in technology and specifically artificial intelligence.
A white paper from Karen Clark Company said that AI is at the heart of new, advanced frameworks.
Hyperscale Data Centres: The Opportunity for Re/Insurers was released with an accompanying statement: “As cloud computing and artificial intelligence drive rapid growth in digital infrastructure, investment in hyperscale data centres has exceeded $400 billion over the past five years.”
The report said: “As hyperscale data centres continue to expand in size, value, and complexity, they represent a growing opportunity for the re/insurance industry.
“More than $550 billion has been invested in hyperscale data centre construction in the US since the first facilities were built in the early 2000s — at least 85 per cent of the data centre market is now hyperscale.
“Over the past five years alone, more than $130 billion in new construction value has been added. When IT equipment is included, the total investment during that period exceeds $400 billion, creating an increasingly valuable concentration of insured assets.
“As these facilities grow in scale and complexity, accurately differentiating risk becomes increasingly important.
“Catastrophe models provide a framework for quantifying these risks by integrating engineering characteristics, hazard exposures and structure-level vulnerabilities. With detailed exposure data and appropriate modelling approaches, insurers can better differentiate risk across facilities and support more informed underwriting, pricing and risk management decisions.”
KCC said the need for insurance protection will grow, with increasing cloud computing and AI demand driving investment in digital infrastructure.
The report said that insurers that develop a detailed understanding of hyperscale data centre vulnerability will be better positioned to capitalise on the opportunities offered by this expanding market.
It said: “From isolated server rooms and mainframes, data centres have evolved into sprawling industrial campuses that support cloud computing, data storage and AI workloads.
“With each new wave of technological advancement, the scale, sophistication, and strategic value of these facilities accelerate. This rapid evolution is reshaping how data centres are designed, financed, protected and insured.
“As these facilities expand in both number and complexity, they present new opportunities for innovation in risk assessment and insurance product development.
“With cloud adoption and AI demand poised to grow for years to come, insurers will require new approaches for assessing and managing these evolving exposures.”
• For more on the white paper, see Related Media
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