S&P: Hyperscale data centres create multi-billion dollar opportunity
A new S&P report has highlighted the rapidly growing role of hyperscale data centres as one of the most significant emerging risk pools for the global insurance and reinsurance industry. Driven by surging demand for cloud computing, artificial intelligence, and digital infrastructure, these massive facilities are reshaping both the scale and complexity of insurable assets, S&P said.
According to the S&P report, annual investment in data centres could exceed $300 billion by 2027, contributing to a global insurable asset base already estimated at more than $2 trillion. With roughly 11,000 data centres currently in operation worldwide, insurers are facing a market that is expanding both in size and importance.
The scale of modern hyperscale campuses is unprecedented. Individual sites can carry total insurable values between $10 billion and $30 billion—far exceeding traditional infrastructure projects such as bridges or tunnels, which typically require $5 billion to $10 billion in coverage. This surge in asset value is expected to drive significant premium growth, with the report estimating that data centre insurance could generate as much as $10 billion in new premiums in 2026 alone—double the size of the global aviation insurance market.
However, this opportunity comes with substantial challenges. One of the most pressing issues is capacity constraint. No single insurer is able to absorb the full risk of these large-scale projects, leading to increased reliance on collaborative insurance structures in which multiple insurers and reinsurers share exposure. While such partnerships help bridge the gap between demand and available capacity, they also introduce coordination complexities.
Beyond construction risks, insurers must contend with a wide range of exposures. These include physical assets such as IT equipment and infrastructure, as well as less tangible but potentially more costly risks like business interruption. For hyperscale operators, downtime can have cascading effects due to interconnected systems and heavy reliance on power and computing capacity. As a result, many large operators are expected to continue using captive insurance structures to cover portions of their risk.
The report also underscores the growing importance of aggregation and concentration risk. Hyperscale data centres often cluster high-value assets in single geographic locations, increasing vulnerability to natural disasters, cyber incidents, and supply chain disruptions. The presence of multiple stakeholders—developers, utilities, investors, and technology providers—further complicates risk assessment and underwriting.
Despite efforts by insurers to expand coverage limits, a protection gap is expected to persist. Certain risks, particularly those tied to operational phases such as technology failures and prolonged outages, may remain partially insured or self-insured. This gap is likely to encourage greater use of alternative capital sources, including insurance-linked securities.
Looking ahead, S&P suggests that insurers will need to adapt their products and underwriting approaches to address the evolving risk landscape. Strong technical expertise, advanced risk modelling, and disciplined capital management will be critical in navigating this space.
While the insurance industry is entering this growth phase from a position of strength, the report emphasises that careful monitoring will be essential. As data centres become increasingly central to global economic activity—and projected to account for up to 14% of US power demand by 2030—their insurability will play a key role in shaping future investment, financing, and infrastructure development.
For more information contact S&P.
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