The spread of artificial intelligence has triggered a major investment wave in data‑centre construction. Rapid expansion is creating conflicts not only over energy use, water demand and grid strain between states, tech companies and local communities, but also generating new insurance and wartime risks.
Rising litigation and local complaints
An analysis published by Howden, the world’s largest employee‑owned insurance broker, shows that litigation and arbitration cases involving major data centres rose from four in 2021 to 14 by the first half of 2026. The disputes mostly concern planning and zoning classifications and environmental issues. Complaints about noise, diesel generator emissions, water consumption and environmental impacts have become more frequent, accounting for 78 percent of the growth in liability cases affecting data centres over the past three years.
Noise has become a particularly prominent issue: half of Howden’s 14 major cases recorded in the first half of 2026 were resident complaints related to noise from cooling, power or IT equipment. By comparison, only two such cases were registered between 2018 and 2025.
Wartime exposure in the Middle East
Howden’s risk mapping indicates that in 2025 the volume of data‑centre capacity located 10–15 kilometres from active conflict zones corresponded to about 60 percent of the amount deployed in the previous five years. In other words, part of the growing digital infrastructure is being placed in areas with significant wartime risk.
In 2026 these risks materialised: during the conflict between the United States and Israel on one side and Iran on the other, Iranian drones struck multiple data centres in the United Arab Emirates and Bahrain. Howden says this was the first known instance of commercial data centres being deliberately attacked under wartime conditions.
A Reuters report from early March noted that US‑linked data centres were among the first pieces of infrastructure to be hit. Amazon Web Services (AWS) had two facilities in the UAE directly damaged, and a nearby strike in Bahrain caused infrastructure harm. The impacts included structural and water damage and extended service outages.
Why data centres are especially vulnerable today
Data centres are no longer just commercial buildings: banks, enterprise applications, government services and AI systems run through cloud services. A physical attack can therefore inflict property damage, IT downtime and substantial business losses simultaneously. It is also often unclear what connections facilities may have to military or state systems; the Iranian Revolutionary Guard said its strikes aimed to expose the role of data centres in the adversary’s military and intelligence activities.
US tech firms in the region and Project Nimbus
The Middle East has become an attractive target for data‑centre development. For Google, Oracle and Amazon the region’s appeal includes energy availability, infrastructure projects and real‑estate opportunities. DC Byte reports that about 230 data centres have been built or are under development across six Arab countries; only a few of these are fully operated by a US tech giant, mainly Amazon.
The region’s strategic importance is heightened by ties between US tech firms and the Israeli state: Amazon and Google secured a combined US$1.2 billion in contracts from the Israeli government in 2021 to provide cloud services (the Project Nimbus deal). Details on any military use of the contract are not public; Google has said the agreement does not cover sensitive or classified military workloads. Ed Galvin, founder of DC Byte, told Euronews in a prior interview that he does not find it coincidental that several Amazon‑linked facilities were among the targets—an analytical interpretation that does not by itself prove motive.
Insurance market capacity and coverage gaps
A modern AI‑serving data centre can be worth US$20–30 billion on site because of high‑end GPU hardware and other infrastructure. Yet the global insurance market’s maximum single‑site capacity is roughly US$15 billion. Because of the risk of wartime destruction, insurers are unable or unwilling to provide such concentrated coverage on standard terms. Standard property policies explicitly exclude war events, and insurance premiums on the market have soared.
As a result, tech giants like Amazon, Google and Oracle increasingly rely on captive insurers—internal, catastrophe‑focused miniinsurers. According to The Economist, premiums paid into such internal vehicles grew by 8 percent globally, reaching about US$240 billion.
European challenges: energy and public acceptance
Risks are not limited to conflict zones. Europe has some 3,300–3,500 data centres, with the largest stock in Germany and the United Kingdom. Rapid development is placing greater strain on power grids and on local communities. The UK regulator Ofgem has warned that speculative data‑centre projects could lock up significant network capacity.
Howden argues that site selection now requires thorough assessment of geopolitical, natural‑hazard, energy‑supply and social risks. The AI boom is increasing not only the number of data centres but also the value concentrated within them: 58 percent of the world’s data‑centre capacity built since 1990 was delivered in just five years, between 2020 and 2025.
Conclusions
Data‑centre infrastructure has become strategically and geopolitically significant. Where companies choose to build, how they structure insurance and how they secure local acceptance will determine resilience against wartime and other large‑scale risks. Recent trends and the attacks observed in 2026 underline the need for a much broader risk perspective from industry players and insurers.
