Construction Insurance for Data Centres

From an insurance and risk point of view, what are the most common causes of losses that insurers experience?

Flood and water ingress feature all too frequently in the insurance market’s loss records.  Clearly, designing strong flood and fire prevention/protection measures can significantly mitigate the risk, especially once the project reaches its testing/operational stage; however, these measures are not always present in the earlier stages of construction.  Unless temporary protections are implemented, the works under construction may be vulnerable to losses of this nature.

Other risk issues to consider, associated with data centres, would include:

• Often large single-building facilities, increasing risk of fire propagation and reliance on effective fire compartmentalisation.

• Complex fit out, with high tech machinery that may be sensitive to rough handling or exposure to unfavourable environmental conditions (e.g. dust, humidity, temperature swings).

• Natural perils in certain areas of the region.

• That the capacity of a data centre is commonly measured by its power consumption (GW), rather than its computing capability, is a clear indication of the criticality of power and the need for uninterruptible supply.  While some data centres will draw on the public power grid, with back-up  on-site generation facilities, others incorporate captive power plants within the project scope to maximise power independence.  This brings a different set of risks for insurers to consider when underwriting these integrated power and data projects.