Insurers in Australia and New Zealand are recalibrating how they assess and underwrite risk as the region’s data centre sector expands rapidly in response to cloud demand, artificial intelligence workloads and broader digital transformation.

The number and capacity of data centres—already numbering more than three hundred in Australia and more than eighty in New Zealand—are growing quickly, with forecasts suggesting Australian capacity could rise from around 1.3–1.4 gigawatts in 2025 to about 1.8 gigawatts within the next three years, even as demand continues to outpace supply.

This acceleration has sharpened insurers’ focus on the complex exposures associated with high-value digital infrastructure and reshaped conversations about coverage terms and risk aggregation.

Unlike traditional commercial properties, data centres combine physical infrastructure with high dependencies on continuous power, cooling systems and network connectivity.

Their clustered nature in key urban corridors means natural catastrophes such as floods, cyclones in Australia and earthquakes in New Zealand can expose concentrated exposures, prompting underwriters to rigorously reassess catastrophe risk, business interruption and contingent supply-chain vulnerabilities.

Such perils are testing conventional policy structures, leading some carriers to negotiate bespoke terms, reframe catastrophe triggers and explore parametric insurance solutions that pay out swiftly when predefined triggers occur rather than relying on slower indemnity claims.

The challenges are further amplified by the systemic importance of data centres to the broader economy.

Disruption at a major facility can ripple through sectors reliant on cloud and digital services, prompting concern among insurers that interconnected risks—particularly non-damage business interruption and cyber exposures—could produce correlated losses on a scale comparable to a major natural event.

In response, many carriers have tightened terms, introduced sublimits, aggregate caps, or limited coverage, while reinsurers have pressed for stronger accumulation controls to contain systemic accumulation risk.

Market participants are also responding with new capacity solutions.

Global brokers have expanded dedicated facilities—such as additional insurance capacity for data centre builds—to support developers and operators across Australia and New Zealand, offering bespoke property, construction and business interruption cover tailored to the sector’s unique risk profile.

This shift underscores an emerging view of data centres as a distinct asset class requiring specialised underwriting expertise, multi-layered coverage strategies and proactive resilience planning.