Five years ago, a $500 million data center would have been considered a major investment. Today, it barely stands out. Projects that once looked exceptional now sit in a market where city-scale developments are becoming more common, and where a facility that may have cost $10 billion to build in 2020 could now be closer to $14 billion or $15 billion before the cost of AI-optimized infrastructure is fully factored in.

More than inflation in the conventional sense, this massive increase in value reflects a fundamental change in what a data center is. Power requirements have shifted. Generation assets are increasingly part of the overall build. And the insurance implications are no longer limited to traditional property losses. The sector has not simply grown larger; it has been reshaped. That is why insurability is becoming one of the most important questions in the market.

A changing risk landscape that goes beyond physical exposures

One of the clearest signs of this shift is the rise of the mega-campus. Today’s hyperscale campuses can stretch across hundreds of acres, target power capacity in the hundreds of megawatts, or even gigawatts, and take five to seven years to move from groundbreaking to full operations.

But physical scale is only part of the story. The more strategic change lies in how these assets are powered. A decade ago, a typical enterprise facility drew relatively modest electricity from the local grid. Now, a single hyperscale campus can consume as much power as an entire city. Across the sector, that demand is beginning to shape how grids are planned and financed.

The result is that power has become the critical constraint. In many US markets, grid interconnection queues now stretch five years or more. That is pushing many developers to consider alternatives – behind-the-meter power built specifically for data center campuses that want to bypass the public grid. Depending on the project, that can include natural gas turbines, solar-plus-battery storage, recommissioned nuclear plants, or small modular reactors.

This changes the risk profile as new exposures, including fuel handling, environmental liability, and generation equipment failure, are added. Further, the changing underlying risk is contributing to a rise in the insurable value of these modern campuses. Energy generation risk now sits on top of already significant construction and operational exposures, creating a combination of challenges the insurance market has not previously had to assess at this scale or complexity. There is no established playbook. In many cases, the market is learning in real time as these campuses are being built.

Is there sufficient insurance capacity?

As project values continue to climb, an often-asked question is whether there is enough insurance capacity to support the growth.

The answer is “yes” but with a layer of nuance. The challenge often goes beyond pure appetite. But while many insurers are interested in data center risks, the reality is that these projects cut across underwriting disciplines – property, energy, construction, and technology – that have historically been evaluated separately, using different frameworks and assumptions. A behind-the-meter mega-campus brings those exposures together in one place.

When underwriters cannot clearly assess the risk, they are less able to commit fully. In these cases, the real constraint is often the quality of information and analysis supporting the placement. Without a comprehensive view of risk, owners and developers may also make inefficient decisions of their own, whether that means retaining too much, paying unnecessarily for transfer, or placing added strain on the balance sheet.

Marsh’s digital infrastructure specialists are observing increasing evidence of the value of advanced engineered risk analytics and industry consulting expertise throughout the project lifecycle, from site selection through operations. This insight helps align the market’s risk financing capacity with the needs of clients and their equity and financing partners.  

An evolving market

There are signs that the market is adapting. Major carriers have expanded single-risk limits, and alternative capital, including insurance-linked securities and private markets, is beginning to play a more meaningful role in the sector. That suggests capacity can continue to develop as digital infrastructure growth persists, provided risks are articulated in a way the market can engage with confidently.

The conversation is shifting from simply buying limits to designing capacity architecture. For large, complex projects, risk financing needs to reflect the specific realities of financing, construction schedules, and long-term operations. That may mean balancing retained risk, commercial insurance, reinsurance, captives, contractual transfer, and alternative capital in a more deliberate way.

The objective is not to transfer every dollar of exposure. It is to make retained and transferred risk explicit, intentional, and aligned with the economics of what is being built.

As digital infrastructure continues to evolve, the core issue is becoming clearer. The market has appetite. The more difficult question is how much capacity can be unlocked when risks are new, connected, and still being understood. In that environment, insurability will depend less on headline market interest and more on whether risk can be clearly defined, evaluated, and structured for a sector that is changing at speed.