Data centers used to be insurable in the same way you’d insure a large office building. That era is over. Zurich Insurance Group AG is now signaling that the insurance industry needs entirely new financial instruments to handle the risk concentrations created by modern AI-era data centers.
Kelly Kinzer, Zurich’s global head of construction and surety, told Bloomberg that securitization products, think insurance-linked securities that spread risk across capital markets, will become increasingly vital as data center projects balloon in size and cluster together geographically. The catch: these products don’t actually exist yet.
The numbers behind the urgency
The average data center project in Zurich’s portfolio has jumped from $150 million five years ago to roughly $3 billion today. That’s a 20x increase in half a decade.
Some individual data centers now carry insurable values of up to $30 billion. When a single facility represents that much concentrated value, a hurricane, earthquake, or even a prolonged power failure becomes a portfolio-level event for any insurer holding the policy.
