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.
NSIP regime moves closer
New regulations to designate UK data centre projects (opens a new window) as ‘nationally significant’ are moving closer. The proposed Planning (Business or Commercial Projects) (Amendment) Regulations were approved by the House of Commons in November 2025, quickly followed by passage through the House of Lords.
In 2024, the government announced that it would expand the list of businesses and commercial projects eligible to use the ‘nationally significant infrastructure project’ (NSIP) consenting regime to include data centres. The NSIP regime was introduced in 2008, originally for approval of energy, transport, water, wastewater, and waste infrastructure projects of national significance. It was intended to provide applicants with greater certainty and efficiency than conventional planning inquiries.
If introduced, the regulations would give data centre developers a right to request that their project be considered a NSIP for the purposes of consenting. The move forms part of broader efforts from the UK Government to encourage investment in data centre development, as it looks to support the growth and rollout of artificial intelligence (AI). This is seen as a central enabler of economic growth.
The government is also exploring ways to reduce the NSIP consenting timeline down to 12 months from its 18-month average.
In focus: rights of light
Much of the land now considered ideal for data centre development lies within areas of established urban sprawl, including so-called ‘grey belt’ land or brownfield industrial sites. This brings them into contact with long‑standing residential and mixed‑use buildings that may already benefit from rights of light.
A right of light is a legal entitlement allowing a landowner to receive natural daylight through specific windows or openings in their property. These rights can be granted expressly in writing or acquired after 20 years of uninterrupted enjoyment. Where rights exist, affected landowners may seek an injunction to halt construction or pursue damages. This creates a material risk to project deliverability and financing, even for developments that otherwise satisfy planning requirements.
Data centres are necessarily large and highly engineered structures, designed to accommodate dense racks of servers and their extensive cooling and power systems. To reduce exposure, developers should adopt a proactive strategy built on early assessment, financial modelling, and scenario planning.
Bespoke Right of Light Insurance solutions are available cover both injunction risk and damages awards. This can assure funders and stakeholders that liabilities are managed effectively, and allow projects to proceed without costly delays.
Read more: Data Centres – Tackling rights of light issues (opens a new window)
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.
For more information, reach out to a member of our team.
