Willis Towers Watson advises data center operators to prioritize risk quantification over simply securing maximum insura

Willis, a WTW business, urged data center owners, developers, builders, operators and investors to rethink traditional insurance buying practices. Many organizations are securing insurance capacity beyond their actual exposure because risks are not being fully understood or quantified. The global marketplace can provide up to US$15 billion of insurance capacity for large-scale data center risks if necessary, but the critical question is how much capacity is actually needed based on a robust assessment of exposures across the digital infrastructure lifecycle.

According to Alastair Swift, Head of Global Specialties and the Global Digital Infrastructure Group at Willis, the focus should be on using data-led analysis to quantify and differentiate exposure in order to secure appropriate insurance limits. Digital infrastructure risk profiles vary significantly based on factors including site selection, power infrastructure, construction methodology, operational resilience, supply-chain dependencies, climate factors and cyber vulnerabilities.

Willis emphasizes that a more sophisticated understanding of these risks, supported by its eight-point digital infrastructure risk framework, can help organizations optimize insurance programs, reduce unnecessary spend and give lenders and investors greater confidence that coverage aligns with actual exposures. Risk engineering and resilience investments can often reduce overall risk more effectively than simply increasing insurance limits.

By assessing natural hazards and climate risk early in the development lifecycle, data center owners and developers can incorporate resilience measures into asset design from day one, including flood protection, enhanced wind resistance, seismic design enhancements, heat and drought adaptation measures, wildfire mitigation features and blast resistance. Cost-benefit analysis can help organizations evaluate these resilience investments and demonstrate a stronger risk profile to insurers, lenders and investors.

Swift stated: Buying more insurance is not always the same as being better protected. When risks are properly modelled, understood and mitigated, clients can build more efficient, resilient insurance programs that reflect their actual exposures. This is especially important where lenders and equity partners expect robust protection; a more tailored approach can often deliver greater value.

Jackie Bolig, Head of Placement and Broking Solutions for North America at Willis, added that as the global digital infrastructure sector scales, clients need a clearer understanding of what they are trying to insure and why. The goal should be to buy the right amount of insurance, supported by evidence, analytics and a thorough understanding of risk, not simply seeking the largest capacity available.