Risk coverage for data loss and cooling-system malfunctions at AI data centers (AIDCs) — the infrastructure that trains and runs generative artificial intelligence models — is effectively nonexistent, industry officials say. Insurers find it difficult to put a value on data, trained models and losses from business interruption. Experts agree that given how critical AIDCs have become, the government needs to build a public insurance framework.
Large domestic property and casualty insurers are receiving inquiries about AIDC coverage, but high premiums are keeping some of them from turning into contracts, according to financial industry officials on the 14th. A senior official at one property and casualty insurer said the company consulted reinsurers and presented a premium rate at a client's request, only for the client to abandon the policy because the premium was too expensive.
Buildings and facilities at AIDCs can be covered under comprehensive property insurance. For a conventional data center, the insured amount is said to run about 400 billion to 600 billion won, with annual premiums of 50 million to 100 million won.
The problem is the limits of property insurance. An insurance industry official said property policies do not cover risks such as graphics processing units (GPUs) shutting down or being damaged by a cooling-system malfunction, or losses from cyber hacking. "The economic value of the data itself is especially hard to measure, so it is difficult to judge how far coverage should extend," the official said.
Giving AIDCs proper protection would require products that go beyond property insurance, and premiums in that case could soar. With insufficient loss statistics available, risk assessments and premium rates are inevitably set on a conservative basis. According to the Korea Data Center Council, there were 182 private data centers in the country as of last year, with 72 more sites in the pipeline for new construction. Jung Kwang-min, a professor of industrial and management engineering at POSTECH, said the government should create a system for sharing risk data and support private insurers so they can underwrite the risk.