Key facts
- The expansion of AI-driven data centers is straining the capacity of property and casualty insurers.
- AIG CEO Peter Zaffino described the situation as 'maxing out' P&C insurers.
- Business interruption is identified as the most significant financial risk for data centers.
- Cyber risks present a medium-to-high hazard, potentially leading to multiple claims simultaneously.
- Data centers face environmental liabilities due to high water and electricity consumption.
The rapid growth of AI-driven data centers is creating insurance challenges that are pushing the boundaries of the traditional property and casualty (P&C) insurance industry, according to AIG CEO Peter Zaffino. He stated that the current demand is 'maxing out' P&C insurers.
AM Best reports that the U.S. has 4,287 data centers as of May 2026, with construction showing no signs of slowing. This expansion is driven by the scale of AI workloads, the concentration of high-value equipment, and the interconnected nature of modern infrastructure. Virginia leads with 14.1% of the national total, followed by Texas with 10.7%.
Business interruption is identified as the most significant financial risk, as a disruption at one data center can cascade across interconnected networks, affecting multiple clients. The replacement of specialized equipment can prolong these interruptions, and compressed construction timelines also amplify risks. Builders risk coverage addresses the construction phase, while operational facilities face severe commercial property exposures, including ignition risks from heat-generating servers and potential shortcuts in construction due to rushed timelines.
Cyber risks are considered a medium-to-high hazard, with the potential for a single attack to trigger first-party property, business interruption, and third-party data breach claims. The report highlights 'silent cyber' coverage gaps as a significant concern. Additionally, data centers face environmental liabilities due to their substantial water consumption for cooling and demand on electrical grids, which can lead to third-party lawsuits. Pollution liability from generators is another exposure.
Estimates suggest data centers could account for as much as 12% of all U.S. electricity consumption by 2028, with a single modern AI data center consuming as much power as approximately 100,000 homes.