Asia-Pacific Data Center Growth Created Insurance Gaps
The rapid expansion of AI infrastructure has outpaced traditional coverage, leading to new parametric insurance solutions.
Updated on Oct. 7, 2026 in Data Centers
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Rapid development of AI infrastructure across Asia-Pacific has left many data centers with insufficient insurance coverage. Insurers are now turning to alternative models like parametric cover to address risks that fall outside traditional physical damage policies.
Why it matters
Data centers face a complex web of risks ranging from power failures to geopolitical instability. As the sector grows, providers must find new ways to manage liabilities that traditional insurance markets can no longer absorb on their own.
The average new data center facility now spans 236,000 sq ft, compared to 141,000 sq ft in 2016. Furthermore, construction for these facilities has maintained a cumulative annual growth rate of 18 per cent over the last decade.
The details
Data centers in the Asia-Pacific region are increasingly forced to spread risks among dozens of insurers because individual facilities now exceed standard market absorption capacities. With 45 per cent of major outages attributed to power failures and legal actions tripling since 2021, providers are grappling with increasingly punitive contractual liability terms.
Timeline
Average facility size reached 141,000 sq ft in 2016.
Lawsuits involving data centers have trended upward since 2021.
Capacity expansion was tracked during the period between 2020 and 2024.
Sixty per cent of capacity resided near conflict zones as of 2025.
Global AI infrastructure spending is projected to hit US$7 trillion by 2030.
The Tech Race
The industry's current struggle to secure insurance coverage mirrors the challenges of rapid technological scaling and territorial risk. This shift marks a departure from traditional infrastructure development as reliance on AI demands unprecedented levels of operational continuity.
While these insurance gaps primarily affect institutional providers, they could lead to higher service costs for businesses and consumers relying on cloud platforms. As providers face stricter liability, the resulting operational costs may filter down through subscription tiers or service reliability benchmarks.
The takeaway
The rapid push for AI infrastructure spending requires a fundamental reassessment of how digital assets are insured against non-physical risks. Stakeholders should prioritize operational redundancy to mitigate the growing threat of power-related outages and contractual disputes.
Further reading
For more on how infrastructure scale influences sector risks, visit our Data Centers section.
Source note: This article includes information reported by The Business Times.
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