Fake offices spark insurance concerns
Asia‑Pacific data centres are expanding rapidly, yet many are insured as if they were ordinary office buildings, a mismatch that could leave owners exposed to losses that standard policies don’t cover.
Construction practices blur risk classification
The HDI Global risk consulting unit released a report on August 5 highlighting four factors that shape loss exposure for the region: micro‑location risk, resource availability, construction standards, and operational preparedness. Authors Johanna Rohrer and Gareth Hopkins note that most facilities are built to typical commercial specifications despite serving as critical infrastructure.
Key structural features—large open compartments, flat slab floors, and drainage systems such as internal downpipes—are common in office construction but can fail under extreme rain. These elements are rarely considered in standard property underwriting, creating a coverage gap.
A separate analysis by the Swiss Re Institute, published in March 2026, found that insurers often receive separate programmes for the building, equipment, and power plant. This fragmentation makes it hard to see the full exposure, meaning a single event could trigger multiple policies without any carrier recognizing the total risk.
Both studies point to a systemic mismatch between how insurers evaluate these assets and the actual hazards they face.
Financial implications of under‑insurance
Underestimating exposure carries tangible costs. New Relic’s 2025 Observability Forecast shows median annual losses from high‑impact IT outages in Southeast Asia at about US$165.5 million, more than twice the global median of US$76 million. Hourly outage costs range from US$1 million to US$3 million in markets such as Singapore, Thailand, Malaysia, and Indonesia.
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Insurance premiums for the centres are projected to climb to US$24.2 billion by 2030, up from US$10.6 billion. The increase reflects demand, not necessarily better coverage. As GPUs, tenants, and services are added, both value and operational complexity grow, making business interruption and loss‑of‑rent lines especially vulnerable.
Climate hazards add another layer of risk. The Philippines topped the WorldRiskIndex 2025, indicating high exposure to earthquakes, typhoons, floods, and sea‑level rise. A World Bank report warned that floods, heat, and drought are lengthening and costly outages worldwide, with power failures and cooling system breakdowns often tied to typhoon‑induced grid disruptions.
Broker checklists derived from the HDI report should include: confirming that construction specifications are shared with underwriters, ensuring site‑specific natural hazard assessments, aligning business interruption limits with actual recovery timelines, and verifying that a single event cannot breach multiple policy limits unnoticed.
Construction costs for facilities rose about 10 % year‑on‑year in 2025, according to Cushman & Wakefield’s Data Centre Construction Cost Guide 2026. Replacement values are therefore moving targets, requiring active review at each renewal.
For operators, the practical upshot is clear: treating a centre like a regular office may look simpler on paper, but it overlooks the unique risks that come with massive power loads, specialized cooling, and exposure to extreme weather. Those gaps can translate into costly claims when a storm or power failure hits.
As the market is projected to double in size by 2030, the volume of inadequately assessed risk grows alongside the opportunity. The core finding of the HDI Global report—that standard approaches to site selection, construction, and operation are increasingly insufficient in Asia‑Pacific—applies equally to conventional coverage placement.
