Insurance Industry Under Pressure as AI Data Centers Expand Rapidly Across the U.S.

The explosive growth of artificial intelligence and generative AI technologies is driving a wave of large-scale data center development across the United States. These facilities—now rivaling the size of small cities—present unique risk exposures and are putting immense strain on traditional insurance capacity and coverage models. Industry experts warn that as data centers become more critical to daily business operations, the insurance sector must move quickly to adapt.

With power demands skyrocketing—expected to grow 160% by 2030—data centers must operate with near-zero downtime. As a result, full insurance coverage is becoming a prerequisite for lenders and investors. However, securing more than $700 million in coverage remains a challenge for many operators, despite the fact that some complexes carry total exposed values exceeding $2 billion.

Specialized risks such as lithium-ion battery fire hazards, weather catastrophes, and self-generated power system failures are driving the need for more tailored insurance solutions. Moreover, the shared-use model of many data centers introduces contractual liabilities that many standard policies fail to address. FM Global, a leader in commercial property insurance, is working to bridge these gaps with engineering-focused support and custom policy design.

The insurance industry is now at a pivotal point. To keep pace with the rapid transformation of the data center landscape, carriers and brokers must expand their capacity and deepen their technical understanding of evolving infrastructure risks. Strategic alignment between insurers and data center clients will be essential to ensure resilience and mitigate downstream impacts across industries relying on AI and cloud services.