How reinsurance can help build better data centers

The property and casualty insurance industry has traditionally focused on transferring and mitigating risk, helping with recovery after property damage or providing financial protection following a liability incident.

But as the risk landscape evolves, there’s an argument to be made for insurers to help shape how assets and critical infrastructure are built and operated.

Data centers provide a strong example of what this might look like in practice.

There are over 2,100 active data center facilities in the US alone, with over 620 more under construction, but this heavy infrastructure buildout comes with real costs.

These facilities also account for 4.4% of total US electricity consumption today, a figure that is projected to double by 2028, due in large part to AI workloads.

This heavy energy usage and its environmental impact have led many communities to oppose the construction of data centers in their neighborhoods, resulting in project cancellations and local moratoriums.

Despite this opposition, demand for computing power shows no sign of slowing, and many of these facilities will be built regardless of pushback. That makes decisions about how they are built and operated the more pressing question.

Through underwriting standards, pricing, and capacity, re/insurers already influence which projects move forward and on what terms.

Used deliberately, those levers can steer data centers toward more resilient design, cleaner power, and stronger ties to the communities that host them.

Designing for resilience

Many data centers are being built where natural hazards are growing: 56% of planned US facilities are in states at high risk of destructive weather and natural disasters.

At the same time, insurance capacity for data centers is already tight, even for the property and shell of these buildings.

That combination gives re/insurers real influence over how these facilities are designed. To secure coverage, data centers will need effective fire suppression and adequate standoff distances, also known as the spacing between structures and nearby hazards.

By rewarding stronger construction standards and hazard-aware siting through pricing and terms, primary insurers and the reinsurers that back them can help ensure these facilities are built to withstand the conditions they will face.

Making cleaner power the easier choice

Energy is an essential resource for data centers, and three factors matter most: speed to power, continuity, and price.

Today, those priorities are pushing many developers toward natural gas, which accounts for more than 40% of the electricity used by US data centers and offers dependable, dispatchable power and, historically, shorter construction timelines.

In the first half of 2026, the US nearly doubled the amount of planned gas capacity for data centers. But while gas ticks the boxes for speed to power and continuity, its prices can be volatile and has high emissions.

As a result, data centers are increasingly turning to virtual power purchase agreements (PPAs), a tool large tech companies have used for more than a decade to lock in stable prices from large-scale renewable projects.

Pairing solar, wind and storage with other means of energy generation can lower costs, emissions, and water use while easing strain on the local grid.

Demand flexibility can also come from outside the data center: “bring your own capacity” arrangements, such as Voltus’s agreement with Google to aggregate up to 100 MW of distributed resources each year in PJM, use virtual power plants to shore up the grid while paying the local homes and businesses that participate.

Further out, a new crop of nuclear fission and fusion startups is pushing for clean, firm long-term power.

Each of these options carries risks that can push developers back toward gas.

Renewable projects can run late or underproduce, virtual power plants must perform during periods of grid stress, and new clean firm technologies lack the operating history lenders look for.

This is another area where re/insurance can help. Credit enhancements can make virtual PPAs easier to finance, and performance guarantees for solar and storage can give lenders confidence that a mixed-power design will deliver what it promises.

Construction-delay and resource-shortfall coverage can protect renewable assets from schedule and output risks, while performance coverage can address the risks virtual power plants face during prolonged grid stress.

Surety bonds can help novel clean firm technologies, such as advanced nuclear and geothermal, grow on a more capital-efficient basis.

And underwriters can also use their pricing and terms to reward projects that include on-site storage or flexible load, so the cleaner, more grid-friendly design becomes the cheaper one to insure.

Bankability that translates into community benefits

With at least 20 proposed US data center projects cancelled after local pushback in the first three months of 2026 and moratoriums emerging across the country, some financiers may be reluctant to back these projects, which require significant upfront capital and can take several years to plan and build.

Local resistance is also pushing development toward distributed models, embedding additional computing power within existing facilities rather than building new centralized campuses.

This approach can reduce community impact and make better use of on-site power already serving those locations, though it introduces its own insurance and operational challenges.

Regardless of the model, re/insurance can help support these large and complex projects by allowing insurers and project owners to transfer part of their exposure to a broader pool of capital, making financiers more comfortable backing the project.

Coverage that protects the expected resale value of equipment such as chips can also make projects easier to finance while supporting reuse of the hardware.

That capacity can free up capital and attract additional funding, giving developers more flexibility to reinvest in the surrounding community through renovated community spaces, cash incentives, and other benefits.

This practice is becoming more common on new projects, and it can build the local support that improves the odds of a successful buildout.

With data center development unlikely to slow anytime soon, the question is no longer whether these facilities get built, but how. (Re)insurers already shape that answer through the risks they

agree to cover and the terms they set. The same tools can reward resilient design, cleaner power, and deeper community investment, helping ensure this wave of infrastructure serves the places that host it.