More than half of planned US data center projects, worth about $670 billion, are being built in states at high risk of severe convective storms, according to new analysis from MS Amlin.
The specialty Lloyd’s insurer reviewed more than 670 planned or under-construction data center projects across the US. It found that 320 facilities, or 51% of the total, are located in states at high risk of tornadoes, large hail, and damaging winds.
The figure points to a growing exposure issue for insurers as AI demand drives new investment in digital infrastructure. Existing data centers in states with high severe storm risk are valued at almost $20 billion, MS Amlin said. Planned facilities in those same areas are worth nearly 40 times more.
The risk is also not limited to severe storms. MS Amlin found that 56% of the planned US data centers it reviewed, representing nearly $800 billion in investment, are in states highly exposed to at least one major natural catastrophe risk, including hurricanes, severe convective storms, earthquakes, or winterstorms.
Winterstorm exposure accounted for 27% of planned data centers, representing about $440 billion in investment. The insurer said winterstorms can disrupt power networks and create business interruption risks.
Another 21% of planned data centers, worth around $340 billion, are located in states at high risk of hurricanes. Earthquake exposure was smaller, with 3% of planned facilities, worth $12 billion, located in high-risk earthquake states.
The findings come as data center development shifts toward southern US regions, where land and power are more favorable for hyperscale facilities. MS Amlin said that shift also places more future infrastructure in areas exposed to natural catastrophe risks.
Severe convective storms have become a major source of insured losses in the US. MS Amlin said these storms generated $52 billion in insured losses in the country last year, making it the costliest region and peril globally. It also cited Swiss Re figures showing insured losses from these storms have grown by roughly 8% a year since 2008.
“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,” said Martin Burke, chief underwriting officer at MS Amlin.
For insurers, MS Amlin said the concern is not only the physical risk to each facility. Data centers are typically insured through several business lines, including property, cyber, and credit and political risk. Without proper oversight, insurers may build up exposure to the same facility across multiple policies.
To monitor this, MS Amlin said it has developed a proprietary database to track data center exposures across its underwriting portfolios.
“As AI investment accelerates, insurers must adopt more advanced ways to manage aggregation risk. If the industry is slow to address this challenge, it could restrict the deployment of capital and roll out of AI infrastructure,” Burke said, adding that the database allows MS Amlin to assess exposure from clustered data center facilities and supporting infrastructure such as power generation.
“This visibility allows us to deploy capacity responsibly to support the sector’s growth while maintaining underwriting discipline. The ability to monitor aggregation risk is becoming increasingly important as this class continues to grow.”
