Market research from Allianz Commercial projects that $7tn will be spent on data centres over the next five years, heightening exposures and introducing new risks for companies and insurers.
The report shows that China and the US are driving growth. The tech industry’s so-called “big three” — Amazon, Microsoft and Google Cloud — accounted for almost two-thirds of global cloud revenue in Q2 2025. Combined with Chinese firms such as Alibaba and Tencent, capital expenditure budgets for 2025 are expected to reach hundreds of billions of US dollars, mostly aimed at industrial-scale infrastructure and dependable energy sources to meet the demands of high-performance AI and cloud computing.
However, this expansion brings a unique risk profile. One of the main concerns highlighted in the report is soaring power demand, which threatens to overwhelm grid capacity and infrastructure. Electricity consumption from data centres is expected to double by 2030 to around 945TWh — slightly more than the total electricity use of all residents of Japan, a country of around 124m people.
Fire, heat and water also pose major risks for data centres, causing serious damage and business interruption. Many data halls now use lithium-ion batteries in server racks, and their fire risk is well documented, particularly given issues seen with electric vehicles and charging infrastructure. Large data centres can also use up to 19m litres of water a day — roughly the same as a town of about 50,000 people.
Against this backdrop, Allianz highlights the crucial role of risk management amid strong growth in Asia Pacific, which accounts for around 30% of global data centre capacity. The sector is expected to grow at a compound annual growth rate of 21% from 2024 to 2028, a faster pace than in more developed markets. China, Japan and India make up 60% of the region’s installed capacity, with the next wave of growth expected from India, Malaysia and Indonesia.
Allianz Commercial Asia regional managing director Christian Sandric says that beyond key risks such as power supply, rising construction costs, supply constraints, fire and cooling requirements, operators must also consider cyberattacks and the potential impact on the surrounding environment, ecosystem and infrastructure.
“These complex and extensive risks call for specialist insurance and expert risk-management guidance. Clients need to work with an experienced team of underwriters who understand the business and can support projects from beginning to end, including multi-year coverage and policy extensions as needed,” he added.