# AM Best Warns Data Centers Increase Insurance Risks > Source: > Published: 2026-06-16 15:20:28.999661+00:00 # AM Best Warns Data Centers Increase Insurance Risks A new AM Best special report warns U.S. property/casualty insurers that AI-driven data center proliferation creates underwriting risks unlike anything the industry has previously faced. The report, "Evolving Data Center Landscape Requires Insurer Innovation," identifies business interruption as the most consequential coverage area given the scale of AI operations and the elevated probability of complex power outages. AM Best associate director David Blades stated that coverage is "currently beyond what the traditional property/casualty industry has previously experienced." U.S. data center construction spending grew from $1.8 billion in 2014 to $28.3 billion in 2024. By one estimate, a modern AI data center can consume as much electricity as roughly 100,000 homes. Brokers have reported single-facility business interruption requests of $1 billion to $2 billion. AM Best also flagged insurer balance sheet exposure via private-credit arrangements tied to data center financing, and noted that more than half of planned U.S. projects -- worth approximately $670 billion -- sit in states at high risk from severe storms, tornadoes, and hail. ### What happened AM Best published a special report on June 15, 2026, titled "Evolving Data Center Landscape Requires Insurer Innovation," warning U.S. property/casualty (P/C) insurers that rapid AI-driven data center growth creates risks beyond what the traditional insurance market has previously underwritten. "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. ### Scale of growth U.S. data center construction spending grew from $1.8 billion in 2014 to $28.3 billion in 2024, per Cleanview data. As of December 2025, 565 facilities were operating with 571 more in the pipeline. AI data centers are projected to account for around 8% of U.S. electricity demand by 2030, up from approximately 4% in 2023. A single modern AI data center can draw as much electricity as roughly 100,000 homes. Hyperscale facilities -- the largest and fastest-growing tier -- are drawing the greatest scrutiny from underwriters. ### Key coverage exposures The AM Best report identifies four primary exposure categories. Business interruption is flagged as most consequential: brokers have reported single-facility requests for $1 billion to $2 billion in business income coverage, per Andy Hendrix, E&S Property EVP at Westfield Specialty. Builders risk coverage -- including Delay in Start-Up and Advance Loss of Profits extensions -- addresses physical damage during construction. First-party coverage for direct loss to structures, servers, and equipment adds further capacity strain. The report also warns that insurers holding private-credit or financing arrangements tied to data centers carry balance sheet exposure the sector has not yet fully priced. Secondary risks flagged include energy and water consumption, mineral supply chains, electric grid investment, and labor costs. ### Natural catastrophe compounding Geographic concentration amplifies the risk picture. More than half of planned U.S. data center projects -- representing approximately $670 billion in investment -- are located in states at high risk from severe convective storms, tornadoes, and hail, per a May 2026 MS Amlin analysis. A further 56% of planned facilities face exposure to at least one major natural catastrophe risk. ### Implications for AI infrastructure For organizations building or operating AI infrastructure, the coverage gap means navigating bespoke high-limit policies in a market with limited historical loss data. AM Best's framing positions the current moment as one where insurer innovation is both necessary and commercially important -- the proliferation of AI data centers is an opportunity for new product development, but only if underwriters can price risk they have never previously modeled at this scale. ## Scoring Rationale AM Best is an authoritative credit rating agency and its special report on AI data center insurance risks is well-sourced and directly relevant to infrastructure practitioners and risk managers. The story is insurance-industry-specific and not a direct technical AI milestone, fitting the solid/niche-but-relevant tier; bumped slightly from 5.4 given the strength of verified sourcing and the direct implications for AI infrastructure planning. Practice with real Health & Insurance data 90 SQL & Python problems · 15 industry datasets 250 free problems · No credit card [See all Health & Insurance problems](/problems/datasets/health)