Howden warns APAC data centres face US$7 trillion insurance gap
Global broker Howden identifies significant coverage challenges for Asia-Pacific's expanding data centre sector, driven by US$7 trillion in AI infrastructure investment.
The US$7 Trillion Coverage Gap
Global insurance broker Howden identifies a growing deficit in insurance coverage for Asia-Pacific's rapidly expanding data centre sector. Advanced Technology Assurance, a global underwriter, estimates that worldwide spending on physical artificial intelligence (AI) infrastructure will reach US$7 trillion by 2030, based on 2026 data.
This substantial investment creates a significant demand for insurance capacity. However, Howden notes that some of the region's largest data centres exceed what the insurance market can comfortably cover under a single policy, often requiring coverage to be spread across multiple insurers and reinsurers.
Outages and Operational Vulnerabilities
Howden Asia's chief client officer, Hamish Ravindran, indicated a large uninsured gap for outages within the sector, having found only three insurance companies offering solutions over 18 months. Howden also noted that nearly half (45 per cent) of major outages result from power failures.
These incidents can expose data centre operators to considerable contractual liabilities, especially given strict uptime commitments to customers. Despite over 98 per cent of Asia-Pacific data centres incorporating redundant capacity, outages can still arise from system failures without physical damage, challenging traditional insurance models.
Expanding Risks and Liabilities
The number of significant lawsuits and arbitrations involving data centres has more than tripled since 2021, coinciding with accelerated AI investment. Beyond outages, Howden identifies construction, natural catastrophes, power supply, and cyber and geopolitical risks as key factors shaping the insurance market.
Zoe Zhang, Howden Asia's regional director for digital infrastructure, reported that new data centre construction grew at an 18 per cent compound annual rate over the last decade. Average new facility size expanded from 141,000 sq ft in 2016 to 236,000 sq ft today.
Geopolitical risks are also rising; 60 per cent of 2020-2024 data centre capacity was near conflict zones in 2025, a fourfold increase from 2015-2019.
The increasing scale and complexity of data centres in Asia mean operators face heightened exposure to financial and operational disruptions. Insurers must innovate with solutions like parametric cover to address non-physical damage outages, particularly for the three-quarters of Asia-Pacific data centres that are retail and wholesale providers with multiple uptime commitments.
The tightening supply-demand balance in some Asian markets gives large technology customers greater contractual leverage, potentially increasing liability for operators. The market's ability to adapt its coverage models will influence the sustainable growth of Asia's digital infrastructure, requiring new products to manage these evolving risks.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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