Aon CEO warns AI data center carry insurance risks

The concentration of billions of dollars worth of equipment in a small number of AI data centers is creating insurance challenges that could affect project financing, Aon CEO Greg Case said Wednesday.

Case told CNBC that building large-scale data centers in close proximity creates concentration risk that makes insurance coverage more difficult to obtain. Without adequate insurance, developers may struggle to access debt markets for financing.

"If you create them and you build them on top of each other, you've created concentration risk in a way in which it makes it more difficult to get insurance," Case said. "If it's more difficult to get insurance, that means the financing structure is going to change completely. You can't access the debt markets," he said.

The financial stakes from operational disruptions are substantial. "Data centers are literally going to measure business interruption at millions of dollars per minute," Case told CNBC.

The concerns emerge as technology companies increase spending on data centers and related infrastructure to support AI development. These investments are creating business for insurers and risk consultants while raising questions about whether traditional insurers can adequately cover the risks.

Aon reported a record pipeline of data center projects in its third-quarter earnings, contributing to 7% organic revenue growth in its commercial risk business during the quarter. Adjusted earnings per share rose 10% to $3.36, while adjusted operating margin expanded 70 basis points to 27%.

The company has created specialized insurance facilities to meet demand, including a $10 billion data center facility and a $2.5 billion energy facility.

Case said Aon works with developers before policies are written to design and locate facilities, reduce business interruption potential and structure insurance coverage that supports financing. "These are engineering conversations around understanding risk," Case said.

Case estimates the global insurance industry currently holds about $4.5 trillion in capital. He said this amount must double or triple to meet growing needs across cyber, AI, data centers and other emerging risks. "Call it 5 trillion to 10 to 15 trillion," Case said.