The rapid expansion of data centres is creating highly concentrated exposures to extreme weather, armed conflict and community disputes, according to new research from Howden.

The broker’s Insuring the Data Centre Supercycle report found that just 20 US locations account for about 80% of data centre floorspace affected by severe tornadoes and hailstorms over the past decade. 

A total of 155 US locations with data centres were hit by at least one severe hailstorm or tornado during the period, but the 20 most affected locations accounted for the vast majority of impacted floorspace. 

The data centres in those locations generate an estimated US$16 billion in annual revenue, illustrating the scale of the potential business interruption exposure as well as physical damage risk. 

Howden says the findings highlight the importance of considering location when assessing data centre risks, with access to power and land often driving development in areas exposed to natural catastrophes.

The research also found growing proximity between data centres and active conflict zones. 

Data centre space located within 10-15km of active conflict zones during last year was equivalent to about 60% of the total recorded during the previous five years combined. Howden says risks have escalated further this year, with up to five commercial data centres in the UAE and Bahrain reportedly struck by Iranian drones. 

The convergence of physical damage, cyber outages and business interruption creates challenges for insurers because war, property and cyber policies can respond differently to the same event. 

Community opposition to data centre developments is also emerging as a significant liability issue. 

Major lawsuits and arbitrations involving data centres more than tripled from four in 2021 to 14 in the first half of 2026, according to Howden’s analysis. Planning, zoning and environmental disputes were major drivers, while noise and nuisance complaints relating to cooling systems, generators, water consumption and visual impact have increased. 

Noise accounted for half of the 14 cases recorded in the first half of 2026. Of nine noise disputes tracked by Howden, only one had been resolved, resulting in the closure of a data centre. 

Howden's chief commercial officer global speciality Edward Howland Jackson said: “For data centre operators, developers and investors, understanding where these risks are concentrated is critical.

"The opportunity for the insurance market is not simply to provide more capacity, but to use data, specialist advice and risk transfer to help clients identify these exposures early and build greater resilience as the sector expands.” 

Click here to read the full report.