Half of the planned data centers in the US are highly exposed to destructive storms and other natural disasters, according to research from specialty global re/insurer MS Amlin.

As US data center development shifts to the south of the country, the insurer claims developers are putting themselves at risk of tornadoes, large hail, and severe storms, termed together as severe convective storms (SCS), as well as hurricanes, winterstorms, and earthquakes.

MS Amlin said that in its analysis of more than 670 data center projects under construction or planned across the US, 56 percent are being built in states at high risk of destructive weather and natural disasters, with nearly $800 billion in investment “highly exposed” to such risks.

Some 51 percent of these data centers are being built in states with high risk of SCS, just over a quarter (27 percent) are planned for states with high risk of winterstorms, another 21 percent are at high risk of hurricanes, and 3 percent are at high risk of earthquakes.

According to MS Amlin, SCS is a major driver of insured losses, costing $52bn in the US last year, with losses from such storms growing by roughly 8 percent year-on-year since 2008.

The US is the costliest region for natural disasters worldwide.

Martin Burke, MS Amlin’s chief underwriting officer, said: “These numbers highlight both the opportunity and the risk. Hundreds of billions of dollars of new digital infrastructure are being directed towards regions at higher risk of potentially destructive severe convective storms.”

“When assets of this scale cluster in hazard prone regions, the potential loss severity from a single storm event can rise very quickly. This is a growth opportunity for the specialty insurance market, but the risks must be properly managed and understood.”

Data centers are generally insured through existing business insurance, such as property, cyber, credit, and political risk. However, the rapid buildout of the data center industry, driven by AI, has necessitated more specialized coverages as the insurance industry struggles to catch up and data centers become exposed to new and hard-to-place risks.

Insurers are also facing concentration risks as more high-value assets are concentrated in single locations, or even if they are offering multiple policies to a single facility. Building a data center requires the integration of multiple stakeholders, with multiple insurance products provided to participants at the same facility.