A global insurance broker, Howden, in a new report has highlighted the growing risks facing data centres globally as their infrastructure rapidly expands, with particular emphasis on extreme weather, geopolitical conflict and liability.
The Chief Commercial Officer of Global Specialty at Howden, Edward Howland Jackson, in a document on the report’s findings, noted that AI boom was fuelling huge investment in data centres globally but that the risks associated with the expansion were wide-ranging and increasingly complex.
According to Howden, in the U.S, a significant number of major data centre hubs are located in areas highly exposed to extreme weather, while globally more digital infrastructure is being developed in areas affected by armed conflict.
In addition, the fast pace of development is reportedly contributing to a sharp rise in legal disputes globally.
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A news report from Reinsurance News, an industry-focused online medium, on the insurance broking firm’s report quoted Jackson as saying that “for data centre operators, developers and investors, understanding where these risks are concentrated is critical.
“The opportunity for the insurance market is not simply to provide more capacity, but to use data, specialist advice and risk transfer to help clients identify these exposures early and build greater resilience as the sector expands,
“Navigating this increasingly complex risk landscape requires specialist risk expertise and deep insurance market insight. Howden combines these capabilities with proprietary analysis to help clients understand and mitigate their exposures and deliver differentiated risk transfer solutions”, the insurance expert added.
According to Howden, expanding on the impact of extreme weather and its highly concentrated nature, while 155 US locations hosting data centres have experienced at least one severe hailstorm or tornado over the past decade, just 20 of those locations account for around 80% of the data-centre square footage impacted.
The insurance firm further clarified: “The massive scale of financial exposures demands resilient construction and design to make efficient use of the limited insurance capital available as the market scales.
“US data centres that suffered at least one severe hailstorm or tornado in the past ten years generate roughly $16 billion in annual revenue. This is roughly the size of the 29-year-old global cyber insurance market and significantly larger than global data centre premiums”, it added.
Commenting on the report’s findings, Head of Natural Resources, Howden U.S, Stuart Adam, explained: “Being able to gauge exposure to severe weather means being able to make smarter decisions around site selection, risk mitigation and how insurance capital is deployed. Despite exposure to extreme weather, these ‘nat-cat’ prone areas are often chosen for access to power and space.
“This need for power is also seeing data centre developers and owners across the US increasingly becoming power plant owners and managers in their own right. That creates a litany of new exposures that developers, investors and insurers need to understand long before breaking ground”, Adam stressed.
Elsewhere, Howden’s report highlighted the growing exposure of data centre infrastructure to geopolitical instability and conflict across the world. In 2025 alone, data centre space located within 10–15km of active global conflict zones was equivalent to ~60% of the total recorded across the previous five years combined.
The insurance brokerage firm stated that this reflected how digital infrastructure had expanded in or near areas across the world affected by war.
Howden expatiated, “For the insurance market, this convergence of physical and digital risk presents challenges around aggregation clauses and the boundaries between cyber, property and war cover. Addressing these exposures will require rigorous cyber-physical risk assessment and greater coordination of policy wordings across different classes of insurance.
“Major lawsuits and arbitrations involving data centres have more than tripled from four in the whole of 2021 to 14 in the first half of 2026, coinciding with the acceleration of AI-driven investment in digital infrastructure.
“Planning, zoning and environmental disputes are the principal drivers of recent legal disputes, particularly around hyperscale and AI campuses.
“Noise and nuisance complaints – including those concerning diesel generator emissions, water consumption and visual impact – have also become increasingly common. Together, these issues account for 78% of the growth in liability cases involving data centres over the past three years”, the firm added.
From the report’s findings, experts believe that the rapid expansion of data centre infrastructure is creating a risk landscape that is becoming increasingly difficult to address through traditional insurance solutions alone.
Howden’s findings, therefore, underscored the need for investors and other insurance industry stakeholders globally to understand and manage these exposures early as investment in the sector continues to accelerate.
