The race to build data centers is reshaping the planet’s power grids, construction markets, and corporate capital spending. Now, some of the biggest companies in technology and space want to send some of their infrastructure into orbit.
Discovering ways to price risks that have never existed at scale before would break new ground for insurance companies.
space x We have launched the most aggressive vision. In January, the company applied to the Federal Communications Commission for a constellation of up to 1 million satellites that could form an in-orbit artificial intelligence data center. CEO Elon Musk has argued that solar-powered computing in space could become cheaper than terrestrial data centers within a few years as launch costs fall and the cost of adding electricity on Earth rises.
Jeff Bezos is also betting on orbital computing, albeit on a longer timeline. In March, his space technology company, Blue Origin, submitted a plan to put 51,600 data center satellites in low Earth orbit. Bezos told CNBC in May that data centers in space are “very realistic,” but that the two- to three-year timeline is “a little ambitious.” google is considering Project Suncatcher, an interconnected network of solar-powered satellites using its AI chips, and startup Starcloud is already flying Nvidia H100 GPUs in orbit.
As these ambitions lead to hundreds of billions of dollars of hardware being installed in space, insurance will become part of the equation.
“If you’re an insurance company and you’re just dealing with terrestrial assets and you’re not thinking about space as kind of the next frontier of underwriting, you’re going to miss out on a huge growth story,” Patton Klein, Marsh US’s aviation and space practice leader, said in an interview with CNBC.
Klein said insurers and customers have already expressed interest. He said there are about 30 insurance companies around the world that specialize in space insurance, and the current total annual premiums are about $500 million to $750 million, a fraction of what would be needed to insure hundreds of billions of dollars of orbital computing infrastructure.
Klein argued that orbital computing is an extension of the space insurance market that has covered launches and satellites for decades, offering insurers a risk that has little correlation to hurricanes, earthquakes and other terrestrial disasters.
Expanding that insurance market to cover data centers in orbit is another matter.
wild west
Andreas Berger, group CEO of global reinsurer SwissRe, said the concept combines two fast-growing risks: AI infrastructure and the commercial space, but raises fundamental questions about regulation, insurability and pricing.
“There are too many unknowns to quantify risk with enough confidence to support sustainable insurance proposals,” Berger said.
An insurance CEO, who requested anonymity, offered a more candid assessment. “This is insane,” the executive said, citing a lack of regulation, a lack of capital and a reliable ability to model risks in what he described as the “Wild West” of space.
Technical uncertainties are equally large. Data centers in orbit will face launch failures, radiation, hardware failures, thermal management challenges, and increased risks of collisions and space debris. Unlike terrestrial data centers, repairs or replacements may require a reboot.
For insurance companies, that’s both a problem and an opportunity. If computing takes off, new multibillion-dollar assets could move with it. But insurance companies may need to largely invent the rulebook before they can cover the next data center boom.
–CNBC’s Dawn Giel contributed to this report.
