The rise of mega AI data centres is driving an "explosive" shift toward captive insurance, a form of self-insurance that lets companies sidestep traditional carriers. Michael Serricchio, US and Canada captive solutions leader at Marsh, said the sheer scale of these facilities is pushing hyperscalers to absorb more of their own property, liability, and construction risks through in-house insurance units.
"What you're going to see is an explosive growth in the use of captives to take on the portfolio risks for data centres," Serricchio said. "Inadvertently, some of the risk for build-outs, construction, surety, property and liability will end up in their captive." He declined to name specific companies, citing the sensitivity of such arrangements.
Why traditional insurance is falling short
The infrastructure behind artificial intelligence is often larger than anything traditional insurers have previously covered. Many data centres are being built on cheap land that comes with elevated weather risks - tornadoes, floods, and drought. Even standard coverage products struggle with the unique assets inside these facilities. S&P Global Ratings points out there is no obvious insurance product for the high-value graphics processing units housed in every data centre.
Business interruption policies present another gap. Tech firms that buy coverage against power failures may face a waiting period of 12 to 24 hours before the policy kicks in. "There's an insurance gap that needs to be solved," said Charles-Marie Delpuech, a director at S&P Global Ratings. "That's where self-insurance comes in."
How captives turn cost centres into profit centres
Captives allow firms to reinvest premiums rather than treating them as sunk costs paid to third-party insurers. AM Best reports the roughly 150 US captives it rates generated more than $8 billion in savings over the past five years. Globally, more than 6,000 captives now write about $240 billion in premiums - close to a fifth more than two years ago, according to Captive Review.
Joe Peiser, chief executive of risk capital at Aon, said the growth has been "a steady and almost uninterrupted increase." He added: "Driving it is loss severity - when premiums go up, clients look for ways to manage losses by taking the bottom layer" of the risk. Marsh manages about 1,900 captives for corporate clients, collectively writing roughly $79 billion in premium.
Hyperscalers explore new risk structures
Some tech giants are creating alternatives that mirror captives without formally establishing one. Meta Platforms needed a solution for its Hyperion data-centre campus because the facility was "beyond fully-insurable," according to Delpuech. The company provided a special guarantee for bondholders backing part of the investment, with S&P assigning an A+ rating to the senior secured notes issued through a special purpose vehicle. Meta did not respond to a request for comment.
The broader trend is reshaping regulatory geography. France introduced legislation in 2023 to encourage home-grown captives, while UK authorities have been consulting on a competitive regulatory framework to build a domestic market. Such moves may shift business away from traditional hubs like Bermuda and the Cayman Islands.
Adriana Scherzinger, group head of captives at Zurich Insurance, said captives now play a critical role in risk financing and volatility management. "In data centres, the scale is unprecedented: trillions of dollars will be deployed in the coming years," she said. "With capacity already stretched, reinsurers, captives, cat bonds and sidecars will all need to play their part to put the risk capacity in place and keep this growth story running through 2027 and beyond."
Why this matters for insurance professionals
The data centre buildout is creating a structural shift in commercial insurance demand. As hyperscalers absorb more risk through captives and alternative structures, traditional carriers lose premium volume on some of the largest property placements. For brokers and underwriters, the opportunity moves toward captive management, fronting arrangements, and reinsurance - areas where firms like Marsh and Aon are already scaling their operations. Professionals who understand captive mechanics and the specific risk profile of AI infrastructure will be positioned for the segment's growth through the end of the decade.
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