Corporate AI Plans Ignite a Boom in Data Centers

The surge in the use of artificial intelligence (AI) by companies in diverse industries is fueling a need for data centers to house the IT infrastructure powering the requisite computing and networking capabilities. 

With massive investments in AI infrastructure in 2025 planned by major technology companies including Amazon ($100 billion), Alphabet ($75 billion), and Microsoft ($80 billion), a boom in data center construction is anticipated.

U.S. data center construction and expansion rose by 34% in 2024 in primary markets such as Northern Virginia, Atlanta, and Chicago, according to a study by CBRE. “The 34% [year-over-year] increase in 2024 is just the beginning,” says Shalin Johnson, vice president, senior risk consultant, and national manufacturing industry practice co-leader at Marsh McLennan Agency.

Market research firm Research and Markets projects that the data center construction market in North America will grow at a compound annual growth rate of 8.1% through 2030, to over $165 billion. At the same time, evolving technology and accompanying infrastructure will require an increasing amount of power generation.

“Each new and expanded data center will contain infrastructure ranging from computer servers to networking, storage, cooling and racking systems. All that technology will spur an 8% increase in energy demand,” Johnson says. “To address these needs, states are reopening coal plants and there is renewed interest in nuclear power plants. Windmills and solar panels will help subsidize the energy demand but are not the ‘end all and be all.’”

Not all states are interested in data center development, instead concerned over their power consumption and the mammoth size of the facilities. Legislation has been passed in Arizona, Illinois, and Arkansas to suspend data center development and restrict the locations where they can be built, The Washington Post reported.

States like Idaho, though, feel differently. The state government in Idaho five years ago established incentives to bring in data centers, notes state Sen. Kelly Anthon (R). Incentives include sales tax exemptions on server equipment and construction materials used to build the facilities.

These inducements, along with Idaho’s low electricity rates, helped attract tech giant Meta to build an $800 million data center that is due to open this year in Kuna, near Boise.

Construction of the 1-million-squarefoot data center produced more than 1,000 temporary jobs. Over 100 operational jobs are anticipated once the data center comes online.

As companies leverage the value of generative AI across their value chains, Meta, Apple, Amazon, Nvidia, Google, Microsoft, and their peers will commit more capital to building new and larger data centers across the country. “As this occurs, it will translate into expanded business opportunities for the U.S. insurance industry, due to risks like cyber threats, natural disasters, and operational disruptions,” says Johnson. Marsh recently launched a Data Center Insurance and Risk Management Services organization in London to assist such client needs.

Lockton has partnered with Parametrix and Lloyd’s of London to provide financial compensation in the event of a breach in a data center’s service level agreement (SLA) with its customers. Parametrix, a provider of digital business interruption risk solutions, developed the AI-based model calculating expected losses by tracking data center outages in real time. Lockton underwrites the product, which is backed by Lloyd’s of London syndicates. “It’s a perfect nexus of loss modeling, understanding the SLA risk, and transferring the loss,” says Preet Gill, Lockton executive vice president and technology risk practice leader.

The parametric trigger is designed to mirror a data center’s SLA contracts with customers like technology companies, cloud service providers, financial institutions, and many other clients. “For example, if there is a 99.5% uptime requirement in an SLA and a breach occurs that causes the uptime to drop below that percentage, the policy triggers and immediately pays out the proceeds that would have been the remedy under the SLA contract,” says Gill. “Whatever the credit amount is in the SLA is paid out in the insurance proceeds.”

The novel solution is one of many other innovative insurance structures that brokers are positioning for clients as today’s digital ecosystem evolves. “The construction and expansion of data centers [is] an engine of economic growth for the future, increasing tax revenue, creating jobs, and attracting other technology companies to locate in a region,” says Randy Nornes, executive vice president and enterprise client partner at Aon. “All that bodes well for the insurance industry.”