Data centres are emerging as one of the insurance industry's most consequential growth stories. At the centre of a global investment surge driven by AI and cloud computing, the sector is drawing in vast sums of capital - with some estimates putting that figure at US$7 trillion by 2030. For brokers in Australia, that is opening up a big opportunity. As clients build, buy and expand these assets, they are seeking more than capacity: they want advice on resilience, power, fire, water, engineering standards and how to take increasingly large and technically complex risks to market.
“Globally we expect the annual demand for AI and cloud computing services to increase 20% every year between now and 2030,” said Andrew Stafford (pictured), FM’s operations manager for Australia and New Zealand. For brokers, that likely means the data centres supporting this tech push are moving from a niche class at one edge of the market to a larger, more strategic play where growth in digital infrastructure is pulling in insurers, engineers and capital at the same time.
Australia is still a smaller part of that global buildout but it is moving in the same direction. Stafford said FM is involved with around 1,100 data centres around the world and has a smaller but growing footprint in Australia through major operators including Canberra Data Centres, AirTrunk and Equinix. For brokers, the challenge is to become part of the advisory conversation rather than just the placement process at the end of it.
That is where the broker role starts to shift. In many commercial lines, the value proposition can still centre on pricing, market access and renewal execution. Data centres are different. These assets sit at the intersection of infrastructure, technology and business continuity and they demand a more layered conversation with clients and insurers alike.
Location is still the first filter. Flood, wind, quake and other natural hazards remain core exposures but Stafford said the complexity quickly deepens beyond nat cat. Power reliability, water supply and cooling are all very important. So is the way facilities are connected to wider systems. These are all factors that shape how resilient a site really is - and how confident insurers will be in supporting it.
Inside the building, the risk story becomes more technical. New battery technology, more combustible materials and highly sensitive equipment mean losses can quickly become expensive. Smoke, heat or escape of liquids can also cause damage. That creates a clear opportunity for brokers who can translate engineering quality into insurance confidence and help clients show underwriters why a risk deserves support.
Claims experience sharpens that message. Stafford did some research for IB and found that FM’s global claims loss history during the last 15 years shows that fire is “by far” the largest cause of gross losses in data centres.
That points directly to where insurer attention is likely to stay concentrated. Data centre placements increasingly depend on how well a broker can explain resilience, protection and operational discipline around this fire exposure that is driving loss severity.
The Australian market is also becoming harder to ignore because the capital behind it is growing. While the US remains the standout example of scale - with operators moving into large dedicated power arrangements and ever bigger hyperscale developments - Australia is clearly being pulled into the same broad trend. More money is coming in, more facilities are being built or expanded, and expectations around risk advice are rising with them.
Capital-intensive sectors tend to demand more sophisticated insurance conversations and these often involve brokers. Owners, developers and operators of data centres are generally not looking at insurance as a routine procurement task and want to know whether their resilience story stacks up, whether the market can support larger insured values and whether their broker understands the dependencies that could turn a technical weakness into a major claim.
Stafford suggested insurers are already positioning for that demand.
“We’ve purchased capacity with the ability to provide our data centre clients with up to five billion dollars of data centre capacity, which is by far bigger than any other insurer around, because we recognise that as this industry continues to grow, their need for increased insurance capacity is going to increase as well,” he said.
The market seems to be gearing up for bigger, more complex and more strategically important risks.
For Australian brokers the significance of the data centre boom could be a chance to move closer to clients, deeper into risk strategy and further up the value chain of high-value AI powered infrastructure.
