Descartes Underwriting Launches Flexi Product For Data Centers

There’s no doubt that data centres (yeah old school spelling for you ) are a growth sector, as financial services in general become more hungry for data storage and faster processing of admin tasks, payments etc. Here’s the word on parametric cover solutions;

Descartes Underwriting, world leader in corporate parametric (re)insurance solutions for climate and emerging risks, has launched a flexible product suite to protect data center lenders, investors and operators anywhere in the world against high severity, low frequency natural catastrophe losses during construction or operational phase.

Descartes’ parametric insurance products protect against property damage and non-damage financial losses arising from up to 20 perils, including severe convective storm (tornado), flood, hurricane, earthquake, extreme heat & deep freeze. Flexible capacity of up to $140 million per policy for earthquake and hurricane risks is available for projects and operational data centers in the U.S., where the market is booming thanks to the growing capacity demands of generative AI and other cloud computing services.

The total data center investments was estimated to be worth $267 billion in 2025, growing to $700 billion by 2035. Insured values can exceed $10 billion per hyperscale campus—large, multi-building data center sites hosting thousands of servers and critical power and cooling infrastructure. At the same time, operators are also expanding through edge facilities, smaller sites located close to end-users to reduce latency, widening the data center asset mix.

However, many high-value sites, and the infrastructure that powers them, oftentimes are located in cat-prone areas. Parametric insurance serves as a strong complementary mechanism to traditional property insurance supporting a comprehensive protection framework both for construction and operations

• Parametric insurance can top up limits, fill monetary and temporal deductibles, and flexibly cover BI & NDBI, including behind-the-meter power plants

• Parametric payouts provide immediate liquidity for DSU (Delay in Start-Up)–related delays, covering financial losses caused by construction delays and supply-chain disruptions

• Parametric insurance delivers rapid liquidity to support operators and lenders when SLAs (Service-Level Agreements) are breached

For example, flooding could force a data center based in Northern Virginia to shut down its cooling and electrical distribution systems, resulting in limited physical damage but significant business interruption costs, including potential SLA penalties for multiple tenants. With Descartes’ parametric Flood-at-Location product in place, such an event could trigger an almost immediate payment, with the amount based on recorded on-site flood depth.

In another example, a Texas hyperscaler could purchase Descartes’ parametric tornado insurance, which is triggered by the tornado’s intensity and proximity to the data center facility. If an EF2 tornado struck the insured location, the policy could trigger a swift payout proportional to the intensity of the event— providing immediate recovery funding without the need for loss adjustment.

Daniel Vetter, Head of Americas at Descartes, said: “Data centers lie at the core of the modern digital economy, and they demand an equally modern risk transfer solution. Our new set of parametric insurance products for U.S. data centers provides reliable, customized coverage which triggers when data center construction is delayed by a natural disaster–even without damage. It’s the right solution for our time.”

Sebastien Piguet, Descartes’ Chief Insurance Officer, said: “Descartes underwrites peak peril risk with a highly scientific approach. We’ve worked with numerous data centers worldwide and their brokers to assess the impacts that various types of natural catastrophes are likely to have on operating data centers, as well as those under development, to provide owners, operators, investors, and tenants with an extension of their insurance which ensures such events do not cause sustained financial harm.”