The growth of data centres is prompting reinsurers to demand improved protection and engineering solutions to address evolving risks, according to a report from Axa XL. 

The group’s North America reinsurance CEO Greg Schiffer says natural catastrophes such as hail, storms and fire could cause multimillion-dollar losses and centres should be constructed with robust protection.

Engineers should also be mindful of flooding risks and ensure “sufficient separation between parts of the building so that at-risk infrastructure and equipment are not concentrated in one area”. 

“These are not new risks in themselves,” Mr Schiffer said. “But the sheer scale of this next generation of data centres, and their immense demand for energy among other things, makes them almost a unique risk. Cedent insurers and their reinsurer partners need, therefore, to work to understand these risks and ensure that a strong risk management culture is in place at the primary level – and throughout the life cycle of the data centre.”

Increased use of generative AI and general internet demands have accelerated the growth of data centres, with an estimated 11,000 currently operating worldwide.

They are estimated to use about 1.5% of the global electricity supply.

A Goldman Sachs analysis projects power demand from data centres could rise 165% from 2023 to the end of the decade.