Insurers are turning to private capital firms and hedge funds to cover billions of dollars’ worth of potential damages to data centres, as they struggle to offer sufficient coverage for sprawling AI investments.
Multiple brokers and a large property insurer said they were setting up catastrophe or “cat” bonds and special-purpose vehicles for alternative investors, as lenders looking to fund the building of data centres struggle to find enough insurance cover for risks such as fires, floods and cyber attacks.
The value of the projects has soared into the tens of billions of dollars, dwarfing the coverage available and prompting insurance companies to turn to alternative investors to cover lenders and tech companies.