New research shows importance of data centre locations as effects of natural catastrophe, war and community disputes are quantified for the first time

London and Miami, 15 September 2026 – Howden, the global insurance broker, today published new research revealing how the global data centre boom is creating a new and growing set of risks. In its report, titled: ‘Insuring the data centre supercycle’, the research shows the rise of AI is driving one of the largest infrastructure investment cycles in history, which in turn is highlighting growing exposure to extreme weather, global conflict zones and liability risks.

Howden’s analysis shows that while data centre infrastructure is scaling rapidly, these emerging risks are becoming more pronounced. In the US, a significant number of major data centre hubs are located in areas highly exposed to extreme weather, while globally more digital infrastructure is being developed in areas affected by armed conflict. In addition, the fast pace of development is contributing to a sharp rise in legal disputes globally.

Extreme weather risk concentrated in a small number of US locations

Howden’s analysis mapped the location of operational US data centres against severe tornado and hail events over the past decade to understand how much of the country’s data centre footprint has been exposed to extreme weather. 

The impact of extreme weather is not evenly spread. Although 155 US locations with data centres have been hit by at least one severe hailstorm or tornado in the past 10 years, just 20 of these locations account for around 80% of US data centre impacted square footage, neatly following Pareto’s principle. 
 

The findings suggest that extreme weather exposure is highly geographically concentrated, creating a critical imperative to diversify risk across portfolios and syndicate peak exposures across the insurance industry and capital markets. 

In addition, the massive scale of financial exposures demands resilient construction and design to make efficient use of the limited insurance capital available as the market scales. US data centres that suffered at least one severe hailstorm or tornado in the past ten years generate roughly US$16 billion in annual revenue. This is roughly the size of the 29-year-old global cyber insurance market and significantly larger than global data centre premiums.

Stuart Adam, Head of Natural Resources, Howden US, said: “Being able to gauge exposure to severe weather means being able to make smarter decisions around site selection, risk mitigation and how insurance capital is deployed.  Despite exposure to extreme weather, these ‘nat-cat’ prone areas are often chosen for access to power and space. This need for power is also seeing data centre developers and owners across the US increasingly becoming power plant owners and managers in their own right. That creates a litany of new exposures that developers, investors and insurers need to understand long before breaking ground.”

Global conflict increasingly intersects with critical digital infrastructure

Howden’s research also highlights the growing exposure of data centre infrastructure to geopolitical instability and conflict across the world. In 2025 alone, data centre space located within 10–15km of active global conflict zones was equivalent to ~60% of the total recorded across the previous five years combined, highlighting how digital infrastructure has expanded in or near areas across the world affected by war.

Such risks crystallised further in 2026, when conflict in the Middle East led to the first known deliberate wartime targeting of commercial data centres, with up to five separate data centres in the UAE and Bahrain struck by Iranian drones to date.

For the insurance market, this convergence of physical and digital risk presents challenges around aggregation clauses and the boundaries between cyber, property and war cover. Addressing these exposures will require rigorous cyber-physical risk assessment and greater coordination of policy wordings across different classes of insurance. For example, physical damage to a data centre during a conflict could also trigger widespread digital outages and business interruption, requiring specialist coverage as the resulting losses are typically excluded under standard property and cyber insurance.

Liability risks rise alongside data centre development

Legal risks are also growing as data centres become larger, more energy intensive and more visible to the communities in which they operate. Major lawsuits and arbitrations involving data centres have more than tripled from four in the whole of 2021 to 14 in the first half of 2026, coinciding with the acceleration of AI-driven investment in digital infrastructure.

Planning, zoning and environmental disputes are the principal drivers of recent legal dispute, particularly around hyperscale and AI campuses. Noise and nuisance complaints – including those concerning diesel generator emissions, water consumption and visual impact – have also become increasingly common. Together, these issues account for 78% of the growth in liability cases involving data centres over the past three years.

Noise complaints are by far the biggest driver of recent legal disputes. Of the 14 cases in the first half of 2026, half of these related to community complaints about noise from cooling, power, computing and other facility equipment. This compares with only two noise complaints from 2018 to 2025. 

This matters because the wave of noise complaints is largely unresolved. Of the nine noise disputes in Howden’s case tracker, only one has been resolved, which resulted in a data centre closure. 

Edward Howland Jackson, Chief Commercial Officer, Global Specialty, Howden, said: “The AI boom is fuelling huge investment in data centres globally but as our analysis shows, the risks associated with this expansion are wide-ranging and increasingly complex.

For data centre operators, developers and investors, understanding where these risks are concentrated is critical. The opportunity for the insurance market is not simply to provide more capacity, but to use data, specialist advice and risk transfer to help clients identify these exposures early and build greater resilience as the sector expands.

Navigating this increasingly complex risk landscape requires specialist risk expertise and deep insurance market insight. Howden combines these capabilities with proprietary analysis to help clients understand and mitigate their exposures and deliver differentiated risk transfer solutions.”