SIRC 2026: Axa XL warns data centre risk concentrates amid APAC buildout
November 3 2026 by Roshan Nambiar
Insurers must look beyond insuring more facilities and instead support the infrastructure needed to operate data centres reliably, with scale, density and criticality reshaping risk across Asia Pacific, Vicky Roberts-Mills, global head of energy transition and digital infrastructure at Axa XL, said.
“A single development can combine construction, renewable generation, grid connections, battery storage, cyber risk, cooling systems, and long-lead transformers and switchgear,” Roberts-Mills said.
“These dependencies can magnify losses, with a failure in one part can delay commissioning or disrupt the entire campus. Well-managed risk helps turn digital ambition into resilient, insurable and investable infrastructure.”
The insurer said its appetite for APAC data centre risks is strong but selective, as the region’s development pipeline and growing concentration of exposure put a premium on engineering quality, transparency and realistic recovery planning.
APAC’s data centre development pipeline reached 19.4 GW in 2025, according to Cushman & Wakefield, with Southeast Asia representing 31% of capacity under construction.
Grid reliability, permitting requirements and exposure to flood, windstorm, heat and water stress vary.
“Where grids are stressed, we emphasise redundancy, backup power and recovery planning,” Roberts-Mills said.
“We assess the systems that keep facilities operating, including power, cooling, telecommunications and shared infrastructure. Cyber or software failures affecting operational technology can be as disruptive as physical damage.”
She added that concentration risk “can amplify infrastructure and catastrophe exposure”, citing a 2025 MIDA report stating that Johor hosts 78.6% of Malaysia’s operational IT capacity.
“Transformers, switchgear and cooling equipment may depend on offshore manufacturing, specialist transport and scarce expertise,” Robert-Mills said.
“Extreme heat and flooding can disrupt cooling, utilities and access. Long lead times can prolong interruption, so engineering and scenario testing must assess realistic recovery from design through operation.”
Data centre losses do not always fit traditional physical-damage triggers or individual policy boundaries.
“The objective is to ensure material interruption scenarios are understood, allocated and, where appropriate, insured.”
Vicky Roberts-Mills, Axa XL
“Software failures, grid curtailment or disruption to shared infrastructure may interrupt operations without obvious property damage,” Robert-Mills said.
“The resulting downtime and contractual costs can exceed the physical loss, so clarity over triggers, exclusions and the interaction between covers is essential.
“If damage emerges during testing, questions can arise over when it occurred, which policy responds and how much delay is attributable to the insured event. A cyber incident affecting operational technology can also disrupt power or cooling without a conventional property-loss scenario.
“Clear handovers, realistic indemnity periods and scenario analysis supported by system logs, testing records and condition reports help define the exposure. The objective is to ensure material interruption scenarios are understood, allocated and, where appropriate, insured.”
On digital sovereignty, Roberts-Mills said it does not necessarily translate into complete self-sufficiency.
“Data centres depend on global technology, capital and interconnected energy, cloud and telecommunications networks,” she said.
“The practical test is whether governments, investors and operators retain the capacity to act when dependencies come under pressure. For insurers, digital sovereignty concerns dependency, concentration and optionality.
“Mapping shared infrastructure and suppliers shows where diversification, redundancy or strategic spares are justified. The objective is not necessarily to eliminate interconnectedness, but to ensure that critical dependencies do not undermine operational resilience. Digital sovereignty is ultimately about preserving the capacity to act.”
Outlook
Roberts-Mills said that capacity is available for well-engineered projects with transparent exposure data, resilient power and cooling, strong cyber controls and credible recovery plans.
“Appetite reflects probable maximum loss, shared dependencies and risk-management quality,” she said.
Hyperscale developments will often require layered placements, co-insurance and reinsurance.
“Underwriters need a consolidated view of data halls, power infrastructure, construction interfaces and critical suppliers,” Robert-Mills added.
“Accumulation across locations, manufacturers and technologies also shapes how much capacity can be deployed and on what basis.
“Pricing and wording scrutiny will increasingly reflect resilience, recovery options, physical-damage triggers, utility interruption and cyber-physical failures.”
“Strong risks should continue to attract dependable capacity and more effective program structures, while weaker or concentrated risks may face higher retentions, tighter sublimits or more restrictive terms.”
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