With US data center construction spending growing from $1.8 billion in 2014 to $28.3 billion in 2024, property/casualty insurers are under pressure to develop coverage solutions beyond what the traditional market has offered, according to a new AM Best report.
The report identifies business interruption as the most consequential coverage area for data center owners. AM Best linked that finding to the scale of AI operations and the elevated risk of complex power outages.
So-called hyperscale data centers are drawing the greatest scrutiny from underwriters. Power consumption is a central concern. By one estimate in the report, a modern AI data center can draw as much electricity as approximately 100,000 homes.
“As data center development and construction spreads, the required insurance coverage is evolving, as it is currently beyond what the traditional property/casualty industry has previously experienced,” said David Blades, associate director of Industry Research and Analytics at AM Best.
The construction numbers show how fast the sector has moved. US data center spending grew from $1.8 billion in 2014 to $28.3 billion in 2024, according to Cleanview data. As of December 2025, the country had 565 operating facilities and 571 projects in the pipeline.
The power demands behind that growth carry long-term implications for underwriters. AI data centers are projected to account for around 8% of US electricity demand by 2030, up from about 4% in 2023. Those figures raise questions about power-availability risk, grid stability, and the effect of each on pricing models.
The AM Best report identifies builders risk as another key exposure. Policy extensions can potentially cover delayed start-up costs and indirect financial losses from construction setbacks. First-party coverage for physical damage to structures, servers, and equipment adds a further layer of risk for carriers.
Business interruption limits are also testing the market’s capacity. Brokers have reported requests for $1 billion to $2 billion in business income coverage for single large data centers, according to Andy Hendrix, E&S Property EVP at Westfield Specialty in Columbus, Ohio. Hendrix said no one has fully determined what the true downside scenario looks like at that scale.
AM Best also flagged risks tied to energy and water use, mineral supply chains, electric grid investment, and labor costs.
The report warned that insurers with private credit or financing arrangements tied to data center projects may carry significant exposure on the asset side of their balance sheets. This is a risk it said the sector has not yet fully priced.
That balance sheet exposure is compounded by where many facilities are being built. More than half of planned US data center projects, worth approximately $670 billion, are in states at high risk of severe convective storms, tornadoes, and hail, per a May 2026 analysis by MS Amlin. A further 56% of planned facilities face exposure to at least one major natural catastrophe risk.
For the US P&C sector, that combination of underpriced balance sheet risk, untested business interruption limits, and growing nat-cat exposure points to a reckoning that AM Best says the industry can no longer defer.
