More than 90% of facilities have redundant power systems, yet some outages may still fall outside cover.
India’s data centre expansion is creating insurance gaps around non-damage outages, cyber risk and construction at operating sites, as rising power demand and larger facilities increase the risks facing operators.
More than 90% of India’s data centres have redundant uninterruptible power supply, generator and cooling systems, but outages can still result from system failures that cause no physical damage and may not trigger traditional insurance cover, according to Howden’s Insuring the Data Centre Supercycle report.
The market is developing solutions such as parametric cover for these risks, particularly for retail and wholesale data centre providers.
These providers account for 86% of India’s data centres and have uptime commitments to multiple customers.
Cyber risk is also becoming more concentrated as data centres become increasingly interconnected.
A single compromise could affect the systems and workloads of hundreds of thousands of tenant organisations, whilst interconnected tenants increase the potential for lateral movement.
Howden said cyber exposures need to be assessed alongside property, power and operational risks rather than separately.
Power infrastructure is another key underwriting concern. Power consumed by data centres built in India grew 68-fold between 2016 and 2025, at a 60% compound annual growth rate, based on S&P data cited by Howden.
Demand is forecast to reach 57 TWh by 2030. Energy accounts for about 65% of data centre operating costs, whilst Maharashtra, Telangana and Karnataka account for around 70% of India’s data centre capacity.
Howden said reliable grid connectivity, substation capacity and redundancy at each location are therefore important considerations for insurers and operators.
Some hyperscale campuses are increasingly using on-site, behind-the-meter generation to secure reliable power. This changes the underwriting risk profile and increases the need for location-specific assessments of power resilience.
Construction at live facilities is also raising business interruption risks. India added 7 million square feet of data centre space in 2025, with construction volumes growing at a 37% CAGR since 2016.
The average size of a new facility increased from 59,000 square feet in 2016 to 276,000 square feet in 2025, concentrating more asset value at individual sites.
Planned expansion at existing data centres between 2026 and 2030 is equivalent to 78% of their current footprint.
Construction alongside live, high-value operations increases the risk of physical damage and business interruption, particularly during testing and commissioning.
Howden said construction and operational risks should therefore be assessed within a single insurance programme.
Water availability is another risk for operators and insurers. Most data centres are located in urban centres where water resources are already under pressure. Cooling a 1 MW facility can require around 25.5 million litres of water each year.
Amit Agarwal, CEO of Howden India, said power reliability, construction at operating sites, cyber concentration and water stress could all affect data centre uptime.
“These risks need to be identified early and managed together, with insurance designed around the exposures that remain,” Agarwal said.
Howden said water use, renewable power sourcing, energy efficiency, power usage effectiveness and carbon footprint should be considered during site selection and planning.
The report also identified gaps in existing insurance frameworks, including water use and non-damage outages, whilst construction, power, cyber and operational risks are often treated separately.
Howden said stronger site-level risk assessments and more integrated insurance programmes will be needed as India’s data centre sector expands.