The global construction industry is seeing a surge in datacentre projects due to rapid technological advancement and AI demand. At the same time, labour shortages and escalating material expenses are creating a difficult mix for both the construction and insurance domains, according to sector specialists at Willis.

North America alone needs 500,000 new workers to meet the pending construction demand, with similar shortfalls in Europe, Latin America and Asia. Such shortages can lead to poor quality construction and reduced adherence to safety protocols, prompting insurance markets to more closely scrutinise project schedules and costs.

Economic factors are also playing a significant role in the global construction insurance market. The ongoing rise in building material costs is pushing project expenses upwards, resulting in increased insurance premiums and the recent surge in tariffs, particularly for construction material imports and exports, is anticipated to further amplify these cost pressures.

Recent natural disasters, such as the fires in Los Angeles (affecting over 16,000 structures), have also had a significant financial impact on the construction insurance market.

Despite these factors, the builders’ risk and construction all risk insurance market is displaying resilience, according to the broker, with rates stabilising and increased capacity for more extensive risks. In Asia, the market has begun to see improved rates and terms for quality risks.

Bill Creedon, global head of construction, Willis said: “The global datacentre boom is not only transforming the technology landscape but also catalysing investments in the energy sector, with a strong emphasis on sustainable energy sources like solar, wind and green hydrogen. Moreover, the nuclear industry is increasingly exploring the potential of Small Modular Reactors to power these facilities. Nonetheless, we are witnessing a robust response from the insurance market, with a continued emphasis on meticulous underwriting to address the evolving technological landscape.”


Image: Apple's Foulum datacentre in Denmark spans 166,000m sq and represents an investment of approximately €850m. Operational since September 2020, it supports European services like the iTunes Store, App Store, iMessage, Maps and Siri. The facility uses advanced cooling methods to minimise energy consumption, and operates entirely on renewable energy sources.

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