Data Centre Market Update: Q1 2026
Market overview
As new data centres continue to come online, insurance buyers are benefiting from favourable market conditions. The highly engineered nature of modern facilities has sharpened the industry’s focus on risk engineering, creating an attractive proposition for insurers and prompting competitive rating structures. This has supported an influx of new capacity across the UK, US, and Asia, with notable lines deployed by FM Global.
In the months ahead, attention will turn to structuring programmes for data centres of increasing scale and value. Projects that once involved modest builds have evolved into multi-billion-dollar campuses, bringing heightened aggregation concerns as high-value assets cluster within single regions. Despite the market’s maturing, many insurers may not have previously underwritten assets of this magnitude.
Key trends:
Service-level agreements (SLAs)
A major gap remains around revenue loss tied to service‑level agreement breaches. Traditional property policies do not respond when operations falter without physical damage, prompting growing interest in parametric solutions that trigger on defined performance failures.
Customer‑owned equipment
The value of GPUs and AI hardware housed within data centres is rising sharply, yet responsibility for loss or damage often sits in a grey area. A major loss event could cascade into lease disputes, supply‑chain disruption, and wider community impact, making clarity of risk allocation increasingly important.
Power resilience
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.
Old vs new
A clear divide is emerging between older co‑location sites and new hyperscale builds. Legacy facilities often carry higher attritional risk, while new sites face uncertainty around rapid technological obsolescence.
Attritional losses
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.
Disproportionate BI costs
Even minor incidents can trigger outsized business‑interruption costs, far exceeding physical damage. This imbalance is somewhat unique to data centre assets, and is prompting closer scrutiny of redundancy, recovery times, and incident‑response planning.
Outlook for 2026
Looking ahead to 2026, the data centre market will continue to evolve against a backdrop of rapid technological change and shifting regulatory expectations.
Sustainability will remain a central theme, with AI‑enabled optimisation offering new ways to reduce energy intensity and extend the useful life of assets that must remain viable over multi‑decade horizons. At the same time, the pace of innovation in AI and computation hardware will challenge operators to future‑proof facilities while maintaining insurability. Local authorities across Europe are also set to play a more influential role, particularly as planning and permitting frameworks adapt to the classification of strategic data‑centre zones and the need to balance development with community impact.
As technology cycles shorten and exposure profiles shift, the industry’s ability to adapt its risk frameworks will be critical to maintaining resilience and supporting continued global expansion. Operators and insurers alike will draw lessons from adjacent industries – especially those with experience managing complex claims, largescale losses, and climate resilient infrastructure – to refine their own approaches.