The race to build artificial intelligence infrastructure is creating enormous new risks that could threaten financing for the data centers powering the artificial intelligence boom, according to Aon CEO Greg Case.
In an interview with CNBC Wednesday, Case warned that clustering billions of dollars of equipment and computing capacity in a small number of locations could make some projects difficult to insure, with consequences for developers seeking financing.
"If you create them and you build them on top of each other, you've created concentration risk in a way in which it makes it more difficult to get insurance," Case said.
"If it's more difficult to get insurance, that means the financing structure is going to change completely. You can't access the debt markets," he said.
The potential financial exposure from operational disruptions is staggering, Case said.
"Data centers are literally going to measure business interruption at millions of dollars per minute," he told CNBC.
The warnings come as technology companies accelerate spending on data centers, electricity generation and other infrastructure needed to support AI. Those investments are creating opportunities for insurers, brokers and business risk consultants. They're also raising questions about whether traditional insurers have sufficient capacity to absorb the risks.
In its third-quarter earnings, Aon reported a record pipeline of data center projects, helping drive 7% organic revenue growth in its commercial risk business during the quarter. Adjusted earnings per share increased 10% to $3.36, while adjusted operating margin expanded 70 basis points to 27%. One basis point equals 0.01%, or 1/100th of 1%.
The company has developed specialized insurance facilities, or pools of capacity to cover specific industries or risks, to address growing demand, including a $10 billion data center facility and a $2.5 billion energy facility.
Managing the risks begins well before a policy is written, according to Case. Aon said it is working with developers to design and locate facilities, reduce the potential for business interruption and structure insurance coverage that can support financing.
"These are engineering conversations around understanding risk," Case said.
The surge in demand for sophisticated risk management is also central to Aon's pending $17 billion acquisition of USI Insurance Services, which is expected to close in the fourth quarter.
The deal will combine USI with Aon's existing operations and NFP, which Aon acquired in 2024, creating a roughly $6.5 billion middle-market platform.
Case said smaller companies face many of the same increasingly complex risks as multinational corporations, but often lack access to comparable analytics, expertise and insurance solutions.
"Our middle market clients have exactly the same challenges, exactly the same risks they face every day, and they deserve to have the content, the insight, the capability that the largest companies in the world have," Case said.
Most industry insiders and experts anticipate AI will make insurance brokerage and consulting more efficient. Asked why Aon is investing billions in acquisitions rather than exclusively expanding its technology capabilities, Case said the two are not mutually exclusive.
"This is about talent and technology," he said. "You get those both right. That's how you build the relationships that matter for clients."
Aon expects $395 million in annual earnings benefits from the USI combination, including $280 million in cost savings and $115 million in revenue synergies.
The acquisition will be financed with debt, and the company expects to prioritize reducing leverage over the next two years.
AI is creating opportunities for insurers to better understand vulnerabilities, even as the technology introduces new threats that could generate widespread financial losses.
Researchers disclosed two critical vulnerabilities in PHP, a programming language used by roughly 70% of websites, on Oct. 21. The flaws could allow hackers to remotely execute malicious code on vulnerable servers without authentication. AI played a significant role in discovering and analyzing the vulnerabilities through cybersecurity firms Calif and Google's Wiz, along with OpenAI.
Asked whether cyber risks are escalating faster than insurers can respond, Case said the industry needs to expand beyond its traditional capital base to meet growing demand.
"We have to keep up. We have to continue to evolve," he said.
Case estimates the global insurance industry currently has about $4.5 trillion in capital. He believes that amount must double or triple to meet the growing needs across cyber, AI, data centers and other emerging risks.
"Call it 5 trillion to 10 to 15 trillion," Case said, outlining his vision for expanding the industry's capacity and clarifying remarks he made in the company's second-quarter earnings call.
His strategy involves tapping institutional investors, pension funds, sovereign wealth funds and wealthy individuals to help finance risks traditionally carried by insurance companies and reinsurers. Case estimates those sources represent a potential pool of approximately $250 trillion in capital — a fraction of which could substantially expand the market.
Aon is increasingly positioning itself not simply as a broker connecting companies with existing insurers, but as an intermediary helping create new pools of capital to absorb complex risks.
"Not just being a market taker or market optimizer for our clients, but a market maker creating new markets to sort of drive and address risk," Case said.
That creates opportunities for alternative asset managers and private investors seeking returns from insurance-linked investments, although investors must be able to evaluate the potential for large and correlated losses.
Case said the critical ingredient is the ability to quantify exposures accurately enough to give investors confidence to commit their capital.
