Data centres and the soft market: where property reinsurance goes next

Data centres are creating one of the biggest growth opportunities for the (re)insurance market. But how can the industry keep pace with the scale and complexity of the risks they bring?

With AI investment accelerating construction and individual data centre campuses now carrying insured values of up to $50bn, the need for innovative risk transfer solutions is growing.

“Data centres are not a single risk. They are construction, property, power and outage risk on the same site, often at the same time. Our clients need structures that can follow that risk through its whole life cycle.”

In a new article published by The Insurer during APCIA, Kyle Menendez, Head of US Property at Howden Re, explores how the industry can respond to growing data centre exposures while maintaining underwriting discipline in a softening property reinsurance market.

For Kyle, the opportunity extends beyond simply providing more capacity:

“This is an enormous opportunity for our industry. We can use our intellect and creativity to define risk appetite and risk clearly, realise that we are in a position to insure these risks, and build solutions to the aggregation concerns. That enables risk transfer across the whole value chain of the reinsurance market.”

From managing concentrated catastrophe exposures to developing indexed and parametric solutions, Kyle discusses how innovation and more effective use of capital can help the industry support one of its fastest-growing areas of demand.