Willis has urged data centre owners, developers, builders, operators and investors globally to rethink traditional insurance buying, warning that many organisations may be securing capacity beyond their actual exposure due to risks not being fully understood or quantified.
Sharper risk analysis can help all stakeholders make more informed decisions about insurance requirements, capital allocation and resilience planning.
Capacity is available, but buying decisions should be risk and data-led
Amid rapid growth in digital infrastructure and AI-driven demand, the sector has focused heavily on securing larger insurance towers. Willis’ experience shows that the global marketplace can provide up to $15bn of insurance capacity for large-scale data centre risks, if necessary. However, the more important question is how much capacity is needed based on a robust view of exposures across the digital infrastructure lifecycle.
Willis' Digital Infrastructure Industry Leader, Asia, Lay See Ong said that the rapid growth of AI-enabled digital infrastructure is prompting organisations to reassess key assumptions regarding asset concentrations, business interruption exposures and dependency risks, especially in Asia. “As facilities become larger, more power-intensive and increasingly interconnected, risk quantification is becoming an important tool in determining appropriate resilience investments and insurance requirements,” she said.
Digital infrastructure risks extend beyond property values
Digital infrastructure risk profiles can vary significantly based on site selection, power infrastructure, construction methodology, operational resilience, supply-chain dependencies, climate factors and cyber vulnerabilities.
Willis says a more sophisticated understanding of these risks, supported by its eight-point digital infrastructure risk framework, can help organisations optimise insurance programmes, reduce unnecessary spend and give lenders and investors greater confidence that coverage aligns with actual exposures. Risk engineering and resilience investments can often reduce overall risk more effectively than simply increasing insurance limits.
Resilience investments can improve insurance and financing outcomes
By assessing natural hazards and climate risk early in the development life cycle, data centre owners and developers can incorporate resilience measures into asset design from day one, including flood protection, enhanced wind resistance, seismic design enhancements, heat and drought adaptation measures, wildfire mitigation features, blast resistance and other location-specific controls.
Cost-benefit analysis can help organisations evaluate these resilience investments, support capital allocation and demonstrate a stronger risk profile to insurers, lenders and investors.
Through this approach, Willis has helped leading digital infrastructure clients improve:
- Credit and financing outcomes, including enhanced S&P ratings and more favourable terms for future development projects.
- Insurance efficiency, including reduced limits where analysis showed lower risk exposure.
- Resilience to natural hazards through design due diligence, tailored analytics and targeted program design enhancements.
- Operational continuity planning by quantifying downtime from major catastrophe events and identifying targeted mitigation actions.
Willis head of global specialties and the global digital infrastructure group Alastair Swift said that buying more insurance is not always the same as being better protected. “When risks are properly modelled, understood and mitigated, clients can build more efficient, resilient insurance programs that reflect their actual exposures. This is especially important where lenders and equity partners expect robust protection; a more tailored approach can often deliver greater value," he said.
From capacity-led to risk-led decision-making
Willis encourages clients to move from capacity-led buying to risk and data-led decision-making by:
- Quantifying exposures across design, construction and operations.
- Modelling realistic loss scenarios instead of relying on market conventions.
- Embedding resilience by design early in project development.
- Assessing critical infrastructure dependencies, including energy, water, cooling and continuity planning.
- Using robust verifiable data to support discussions with insurers, lenders and investors.
“Across Asia, we are seeing increasingly sophisticated discussions around insurance purchasing. Owners and investors are asking whether they are buying more insurance than necessary, while Lenders are seeking greater confidence that programmes provide adequate protection. The common thread is a desire to make decisions based on data than convention.
“Client insights show that sharper risk quantification can help stakeholders across the digital infrastructure ecosystem make smarter decisions, avoid unnecessary insurance spend and ensure insurance and risk programmes remain appropriate as digital infrastructure becomes larger, denser and more interconnected,” said Ms Ong.