Annual Meetings-5. Data Center Construction Issues

5. Data Center Construction Issues

Pdf Summary

The presentation reviews the rapid growth of data center construction and the insurance implications for builders risk underwriting. It highlights major market expansion driven by AI, cloud, and edge computing, with projected capacity increases across the Americas, Europe, Middle East, Africa, and Asia-Pacific. Typical North American Tier III/IV data centers cost about $10M–$13.5M per MW of IT load, with electrical and cooling systems making up the largest shares of capex.<br /><br />It explains common data center types and sizes, from small enterprise and edge sites to large colocation and hyperscale facilities. The slides emphasize design differences such as low- versus high-density layouts, onsite power generation, and emerging trends like modular construction and the convergence of crypto and AI infrastructure. Water and power constraints are discussed, including the growing use of closed-loop cooling systems and increased onsite generation due to grid interconnection challenges.<br /><br />From an underwriting perspective, the market is described as cautiously selective, with sensitivity to large total insured values, catastrophe exposure, inflation, and supply-chain delays. Capacity is limited, especially for very large campuses and high-cat areas, leading to smaller line sizes, layered programs, and tighter deductibles and sublimits. The outlook suggests more phase-specific limits, closer attention to peak values and equipment delivery timing, and lower DSU limits with stricter triggers.<br /><br />Key loss drivers include water damage, hot work fires, commissioning failures, and weather events. Recommended mitigations include strong governance, experienced risk management, water controls, hot-work protocols, commissioning procedures, and weather planning. Underwriters are advised that dense, vertical projects are higher risk, liquid cooling requires careful definition review, long lead items can delay schedules, and modular construction may compress timelines while increasing transit exposures.

Keywords

data centers

builders risk

underwriting

hyperscale

colocation

AI infrastructure

cooling systems

water damage

supply chain delays

modular construction