As we enter 2025, there are many new concerns to property insurers, which could have a significant impact on the insurability of high-tech facilities. Industries such as semiconductor operations, data centers, new AI centers and telecom (among others) are at the forefront of technological advances which could have an impact on property insurance, directly affecting property insurance rates and possible insurability of these facilities. As the following items are contemplated for both new and existing facilities, it’s important to work with your WTW insurance team, to make sure the facilities remain well-protected, and these emerging technologies can be insured.
Lithium-ion (Li-ion) battery uninterruptible power supply (UPS) systems are one of the largest concerns for tech insurers these days. Everyone is aware of the fire hazards associated with Li-ion batteries when it comes to automobiles, the batteries either over-charge or are damaged, resulting in overheating and fire. Unfortunately, because these batteries are made of chemicals, the fire is very strong and needs a lot of water to control or extinguish it. In many cases, extinguishment isn’t possible, and the only recourse is to move the batteries outside and wait until they run out of Li-ion fuel.
There are similar concerns with Li-ion battery UPS systems. In addition to the fire/safety concerns with regular battery UPS systems (hydrogen development, acid spill, arcing/fire), the use of Li-ion batteries now introduces a fire hazard which is significantly more difficult to extinguish than the typical UPS battery systems. In addition, many Li-ion battery rack systems are located inside the main facilities, which then exposes key equipment and processes.
Any use of Li-ion battery UPS systems should be designed with the assistance of your WTW property risk control team. Ideally, Li-ion battery UPS systems should be in a separate building, detached from the main facilities. Where this isn’t possible, the UPS systems should be in a minimum 2-hr fire-rated room, preferably against an exterior wall which has easy access for the public fire brigade. Both the cut-off building and the UPS room should be provided with fire sprinkler protection, generally designed to provide significantly more water at a higher pressure than the remainder of the facility.
If Li-ion battery UPS systems are in a separate building, there should not be any significant effect on the insurability of the facilities. On the other hand, if the UPS systems are located within the main facilities, even if the UPS systems are in a 2-hr cut-off room, it could have detrimental effects on the insurability of the facilities and should be discussed with your WTW team.
Finally, all UPS systems should have a formal preventive maintenance program which meets (or exceeds) both the manufacturers’ guidelines and the National Electrical Code (NEC/NFPA 70B – electrical preventive maintenance). In addition to the typical battery system testing required by the manufacturer and NEC, this should also include weekly visual inspections of the batteries and battery room, to include temperature, string voltage, battery management system, as well as overall condition. Battery discharge testing should be done every five years, or with a frequency of every 25% of battery service life and done in accordance with the manufacturer’s guidelines to prevent thermal runaway. Finally, there should be a plan to replace Li-ion batteries whenever the measured capacity approaches 70% of its rated capacity, or every 10 years regardless of condition.
Although liquid cooling systems have been used for several years, their use is becoming much more prevalent, especially with the heat production resulting from AI systems and other data-intensive operations. The traditional liquid cooling system utilized a small amount of cooling liquid and was generally limited to a single CPU or computer rack. Newer systems are now much larger, some containing several hundred gallons of heat transfer liquids, which can now be piped throughout a large area.
One of the major concerns for practically all property insurers these days is liquid damage to facilities, and in fact, there are many insurers that won’t provide insurance if the liquid damage potential to a facility is too large. In the past, this has been a concern specific to domestic water piping and Computer Room Air Conditioning (CRAC) units. With the wider use of liquid cooling systems, this introduces another hazard to these high-value facilities, which are extremely susceptible to liquid damage. Where significant use of liquid cooling is used or planned, this should be coordinated with your WTW property team.
The design of the liquid cooling systems should incorporate automatic shut-off and isolation of the liquid transfer systems with a combination of leak detection throughout the facility and excess flow conditions. Non-combustible cooling liquids (such as water or glycol) should be used for all piped cooling systems, and noncombustible or UL-listed/FM-approved less hazardous dielectric fluids should be used for submerged systems. Submerged systems should also be fully contained and sealed, preferably with a double-walled containment system. All areas containing liquid cooling systems containing more than 10 gallons of liquid should be provided with a system to drain any spilled liquids to a safe location.
Finally, all liquid cooling systems should have a formal preventive maintenance program which meets (or exceeds) the manufacturers’ guidelines. The PM program should include at least annual functional testing of the shut-down/leak interlocks, and annual functional testing of the fire detection system interlocks. In addition, there should be a formal leak emergency response plan, with complete details on how to limit the leak, the exact location of all manual shut-off valves, methods for both manual and automatic drainage to a safe location and possible contracts with restoration companies to clean and restore any equipment subject to liquid damage.
Full-shut-down electrical testing is becoming increasingly important to property insurance companies. In addition to the typical testing recommended by the National Electrical Code, insurers are now looking for main electrical breaker testing regularly (generally every 3–5 years). This has typically required a full shut-down of the site electrical systems, to fully test and reset the main breakers. To avoid a future full shut-down of the site electrical systems, and to keep business interruption to a minimum, tech facilities should start considering duplicate main breakers installed in parallel, so that breakers can be safely tested or removed without affecting site power.
Duplicate electrical systems can easily be designed into new construction; however, this becomes much more complicated after a facility has been completed and is in operation. To conduct this testing, if not originally designed, it may become necessary to provide a duplicate electrical system to comply with any future insurance recommendation. It could take facilities several years working with an electrical engineering firm, to determine a method to fully test the main breakers after operations begin.
The NFPA 110 code requirements for back-up generator testing have recently been updated to ensure generators are maintained in good condition and will work when needed. The largest change is the requirement for monthly generator testing to be done under a 30% load. To limit the possibility of wet-stacking in the engine exhaust (a build-up of carbon/unburned fuel in the exhaust which could impair the engine), the codes have removed the requirement for testing under both no-load and full-load conditions. Unfortunately, most generators aren’t provided with a load bank to facilitate 30% load testing, and a portable load bank is needed. To belay this future cost, generators should be purchased with a built-in load bank, to easily conduct the required quarterly generator testing, and for existing generators, it may be beneficial to invest in a portable load bank, to meet the testing requirements of the National Fire Codes (NFPA 110).
For both new and existing tech facilities to be easily insurable, there are several items to consider in both the design and operational phase of your facility. Although the above items highlight some of the newer property insurance recommendations, there are others that will also be important. It’s important to work with your WTW insurance team, to make sure the facilities are constructed to insurance guidelines, and remain well-protected, addressing these and other emerging technologies which can be of concern to insurance companies.
WTW hopes you found the general information provided in this publication informative and helpful. The information contained herein isn’t intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you’d like more information regarding your insurance coverage, please don’t hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
