Data centres create complex challenge with hybrid risks: Brown & Brown
The rapid expansion of AI-driven data centre infrastructure is reshaping the insurance landscape, with facilities that generate their own power creating more complex risk profiles that span both energy and digital infrastructure, according to Brown & Brown’s 2026 Energy and Infrastructure Insurance Market Outlook, which will be of interest to risk managers.
Brown & Brown said one of the key emerging considerations for insurers is how data centres are powered, with the distinction between traditional grid-connected facilities and behind-the-meter models becoming increasingly significant in determining insurability, risk profile and the cost of risk.
Grid-connected data centres remain the most established model from an insurance perspective, with power generation and distribution risks retained by utility providers while operators remain responsible for facility operations and uptime.
Brown & Brown observed that this separation of responsibilities aligns well with existing insurance products and underwriting practices, allowing insurers to deploy capacity across property, business interruption, liability and cyber lines through standardised programmes.
By contrast, behind-the-meter facilities, where operators co-locate or directly integrate on-site power generation, introduce a hybrid risk profile that combines data centre operations with energy infrastructure exposures.
Under this model, operators assume responsibility not only for IT systems and facility management, but also for power generation and energy management, creating exposures including generation failure, mechanical breakdown, fuel supply interruption, battery energy storage system (BESS) fire risk, environmental liability and the potential for correlated outages affecting both power and IT systems.
Brown & Brown warned that the convergence of these risks presents challenges because traditional data centre underwriters may lack appetite or expertise in energy-related exposures, while energy markets are not always structured to address hyperscale digital infrastructure risks. As a result, the insurance market for behind-the-meter facilities is less mature and more fragmented, the report states.
From a placement perspective, these projects often require bespoke programme structures combining multiple insurance markets and layered coverage solutions. Capacity for property damage and business interruption can be constrained, with higher pricing and more restrictive terms than conventional grid-connected facilities.
Insurers are applying greater scrutiny to redundancy across power and IT systems, fuel supply reliability, fire protection for battery storage and operators' experience managing integrated energy assets.
The emergence of these hybrid risks comes as underwriting across the broader energy and infrastructure market becomes increasingly data-driven, even as property market conditions soften.
Brown & Brown said while grid-connected facilities remain the benchmark for insurability and stability, behind-the-meter projects require increasingly sophisticated risk structuring and insurance solutions.
According to the report, carriers are making greater use of enhanced catastrophe modelling, portfolio analytics and third-party engineering insights to refine risk selection and differentiate between higher- and lower-performing assets.
Organisations able to demonstrate strong resilience measures, robust engineering and proactive maintenance programmes are securing more competitive pricing, broader coverage and improved terms.
The report also highlights advances in catastrophe modelling, including higher-resolution severe convective storm and hail models and engineering-informed analytics.
Brown & Brown said spatial disaggregation techniques that distribute insured values across the footprint of solar farms are improving loss estimation for localised perils such as hail, flood and wildfire.
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