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AI data centers, battery storage, renewable generation and grid connections are being developed as integrated systems. Each project can contain high-value imported equipment, complex construction interfaces, specialist contractors and strong dependence on a limited number of power and technology suppliers. The potential loss may exceed the appetite of a domestic insurer or fall outside the automatic scope of an existing treaty.
Facultative reinsurance provides risk-specific capacity. The reinsurer evaluates the individual project, negotiates terms and accepts a defined share or layer. This flexibility is valuable when the exposure is unusually large, technically new or concentrated in a location where natural catastrophe capacity is constrained.
Successful placement depends on more than an asset value. Reinsurers need to understand how the system is built, how it earns revenue, where common points of failure sit and how long critical equipment would take to replace.
During construction, the main exposures may include physical damage, natural hazards, contractor error, testing failure and delay in start-up. After commissioning, attention shifts to fire, electrical and mechanical breakdown, cooling failure, battery thermal runaway, grid interruption, cyber-physical systems and business interruption. A facultative programme should follow this lifecycle instead of treating construction and operation as unrelated placements.
The transition date is critical. Testing and phased handover can create uncertainty about which policy responds. The placement should identify when equipment becomes operational, how partially completed sections are valued and whether delay or business interruption protection continues across the transition.
Relative priority index for a facultative underwriting review.
Illustrative planning values only; the site survey and project schedule determine actual priorities.
A data center combines servers, electrical distribution, transformers, battery systems, generators, cooling equipment and network infrastructure within a highly interdependent facility. The business value can be much greater than the physical repair cost because customer contracts depend on continuous capacity.
Underwriting information should include electrical single-line diagrams, cooling design, fire compartments, detection and suppression, battery chemistry, redundancy, utility agreements, fibre routes and workload-transfer capability. The maximum foreseeable loss needs to consider shared equipment and whether damage in one hall can affect the rest of the campus.
Power is a central dependency. On-site generation and storage may improve resilience while introducing additional fire, machinery and fuel risk. New data center clusters can also create geographic accumulation where several facilities share the same hazard, substation or supply chain.
Wind, solar and battery projects are exposed to weather, serial defects, cable damage, transformer failure and supply-chain delay. The risk profile changes with technology type, manufacturer, operating history and maintenance strategy. A project using new equipment may offer efficiency benefits but provide less claims experience.
For battery energy storage, separation, ventilation, detection, suppression and emergency response are material. For wind projects, turbine model, foundation design, cable routes and availability of heavy-lift equipment influence the loss. Solar portfolios require attention to hail, flood, wildfire, trackers and the concentration of panels across one site.
A scenario allocation used to discuss facultative limits and sublimits.
Illustrative allocation only. It does not predict the result of an actual event.
Large projects may be insured through several reinsurers participating in proportional shares or different excess layers. The structure should avoid gaps between underlying policies, treaty support and facultative certificates. Deductibles, attachment points, follow-the-settlements language, governing law and claims-control provisions must be coordinated.
Delay in start-up and business interruption require special attention. The indemnity period should reflect the schedule for manufacturing and transporting replacement transformers, turbines, cooling systems or battery modules. Revenue assumptions should align with power purchase agreements, capacity contracts and customer service obligations.
Project documents change during construction. Reinsurers should receive material design changes, updated values and revised schedules. After an incident, the insured needs to preserve failed equipment, engage specialists, document mitigation decisions and separate repair cost from improvement.
The Kompetenz coordinates technical data, risk engineering, wording and international market participation. We help insurers and project owners present the risk clearly, build appropriate layers and maintain continuity from construction to operation. Facultative reinsurance then becomes a practical source of capacity rather than a last-minute solution for an oversized risk.
