Data centres biggest new growth opportunity for reinsurance: Swiss Re

The data centre building boom triggered by AI could open one of the biggest new growth opportunities for reinsurers, as trillions of dollars are poured into infrastructure to meet soaring demand for computing power.

Key points:
Data centre premiums set to reach $91 billion
$320bn nat cat peak loss year possible
US casualty risks remain elevated

Around $6.6 trillion is expected to be invested globally in data centres by 2030, according to Swiss Re. Capital spending by the five largest cloud service providers alone is forecast to exceed $600 billion this year.

Swiss Re sees a significant opportunity for insurers and reinsurers to support that expansion. “When you look at the new opportunity out there, it’s the data centres,” Urs Baertschi, CEO of property and casualty reinsurance at Swiss Re, told Monte Carlo Today. Click here to watch the full interview.  

“It’s not a new topic per se. But the investments in building here lead to new opportunities for the industry to step up and support this technology and the infrastructure build that comes along with it.”

The opportunity extends across property, engineering, cyber, liability and business interruption. Swiss Re Institute expects global insurance premiums associated with data centres could reach $91 billion by 2030. 

“It [AI] will help us make better decisions, help us grow and, over time, potentially cover perils that today we cannot.”

New concentrations of risk

The scale of investment also brings new concentrations of risk, from expensive equipment and huge power requirements to dependencies on utilities and supply chains. Swiss Re estimates more than 40% of US data centre capacity could be located in significant-to-very-high tornado zones, with more than a quarter exposed to frequent large hail.

The opportunity also goes beyond insuring the AI infrastructure. The technology itself could change what insurers are able to do. “This is a game-changer from a technological capability perspective,” Baertschi said.

“It will help us run our businesses more efficiently and effectively. It will help us make better decisions. It will help us grow, and it will also potentially, over time, help us to start covering certain perils that today we cannot.”

But there is another side to that equation. “We also have to play some defence because the fraud possibilities, the bad actors, they’re getting a lot better,” he said, pointing also to potential downstream liability from AI and technological innovation.

Human judgment, however, remains central. “For us at Swiss Re, it’s always human in the loop,” he said. “We make our own underwriting decisions. They are helped by technology, by tools, including some of them that are powered by AI, but it’s the human that makes the decision and is responsible for those decisions.”

Nat cat reality

The accumulation of high-value assets comes against a natural catastrophe loss trend that continues to move upwards.

“You simply cannot look at the nat cat world through a short-term lens. This is a long-term proposition.”

Global insured nat cat losses have been relatively benign recently, but Swiss Re Institute estimates the long-term trend is still increasing by 5-7% annually in real terms. A return to trend would put insured losses at about $148 billion in 2026, while a peak year [the sort of scenario expected once a decade] could reach $320 billion.

“You simply cannot look at the nat cat world through a short-term lens,” Baertschi said. “This is a long-term proposition. We need to look at trends. We need to look at exposures. We need to look at the underlying risk. One year actually does not dictate the trend.”

Models for secondary perils including wildfire, severe convective storms and floods have improved, he said, although wildfire remains complicated by its human causes.“ Human behaviour is more difficult to model,” Baertschi said. 

Many microcycles

That risk picture is colliding with a more competitive reinsurance market as abundant capacity looks for opportunities to deploy. 

“It’s fundamentally a question of supply and demand,” he said. “When you look at the demand side, the insurance industry overall is taking on more risk, more volatility, more exposures and so demand generally is going up. “At the same time, there is plenty of capacity out there right now as well, and that is the dynamic that sets the market.”

The result, he said, is “not just one cycle; it’s many microcycles”. That distinction is important to where Swiss Re is prepared to deploy capital. Nat cat remains an area where it believes it can help clients, alongside property more broadly and most specialty lines.

Baertschi also said cedants are looking for more than reinsurance as competition increases. “They’re looking for strong and trusted partnership. They’re looking for claims-paying capabilities and advice. They’re looking for insights and information and data around things where they maybe have less of an insight from their own business, he said.”

Liability caution

One major area where Swiss Re remains distinctly cautious is US liability. “The fundamentals here have just not changed enough to have a different view on that risk for us,” Baertschi said.

While some in the market see improvements, he believes it is too early to conclude that the underlying problem has changed. “It remains a very challenging and structurally flawed environment,” he said. “There have been some improvements from some tort reform in some states. We will have to see what kind of effect they will have.”

Nuclear verdicts remain at record levels in the US, with 190 in 2025, up 41% year on year. “When you look at the nuclear verdicts, when you look at the number of class action lawsuits, when you look at the litigation funding, those metrics keep trending up,” he said.

The long-tail nature of casualty makes that particularly important as today’s underwriting decisions may take years to reveal their true economics. “The industry needs to be clear about the risks that are being taken on,” Baertschi said. “They usually materialise much, much later than when we write them, and we have to continue to be very focused on this topic.”

For Swiss Re, opportunities in data centres, property and specialty therefore sit alongside areas where it remains prepared to take a more cautious view. “There are different opportunities out there around the world,” Baertschi said. “There’s many different microcycles as well. It is not one-size-fits-all.”

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