Driven by demand from cloud computing and the advent of artificial intelligence, data center construction projects are growing larger, with multibillion-dollar endeavors spanning several years becoming more common.

Given the rapidly evolving and expanding online universe, pace has become almost as important as scale as end users including internet providers and developers specializing in data centers rush to add such facilities.

The insurance market for the projects also is evolving to meet the increased demand.

“The expectation is speed to market. How fast can you get them done,” said Darin Hart, senior vice president of advanced technology at Suffolk Construction Co.

Boston-based Suffolk is “at capacity” for data center construction, with “no end in sight,” Mr. Hart said.

Data centers are growing in size, number and locations, driven by cloud computing and expansion of applications such as artificial intelligence and streaming services, said Brian Hearst, Salt Lake City-based managing director, construction and infrastructure, for Aon PLC.

“There is an enormous push once construction starts to get that work done … there’s a lot of velocity in what is going on,” Mr. Hearst said.

“Speed of execution is really the hot trend right now. It’s less about cost than can they actually build it and get it operational based on their timelines,” said Jim Dunn, Atlanta-based U.S. construction practice leader for Marsh LLC. “It seems like everything we touch now starts with a B, as in billion.”

Marsh in May launched its data center insurance and risk management services to meet the rising level of activity among data center and digital infrastructure clients.

Insuring such growing projects in a time of shrinking primary lines has created more legwork for brokers and limit-sharing for insurers.

“The capacity is there, although it’s harder to get … we’re seeing a lot more quota share. It’s taking more insurance carriers to fill out the capacity, and we see that on the excess liability limits as well,” Mr. Dunn said.

Some coverage towers have 10 to 20 insurers, which requires more communication, more underwriters and more coordination, he said.

“Typically, for something of that size, you wouldn’t necessarily have one carrier taking the whole load. It would be spread across a number of markets,” said Simon Simpson, London-based construction and infrastructure leader for Aon’s global broking center.

The extension of project owners’ self-insured retentions in the face of rising project values also has become a typical part of the insurance package for the largest projects because of the huge values involved, Mr. Hart said.

“It’s just not like it used to be. You can’t expect our trade partner to take on that risk, or the general contractor, for that matter. So a lot of the owners take on that risk and indemnify us,” he said.

The projects sometimes involve building multiple high-value buildings on a single campus, said Randy Hodge, chief operating officer of FM.

“There’s been an acceleration in the last few years, driven primarily by the boom in AI,” Mr. Hodge said. “The investment for one building can be as high as $700 million, and now they’re starting to build more and more of them on the same campus.”

FM in May launched FM Intellium, a business vertical offering specialized loss-prevention services and coverage to data centers.

“Sometimes insurance needs can run up into the multiple billions of dollars. That’s where we’re starting to see the industry be more challenged,” Mr. Hodge said. “Lenders are requiring insured limits up to the full value exposed, which in some cases approaches $2 billion.”

FM offers limits up to $2 billion for “a well-engineered data center,” he said.

Larger projects also have immense energy needs, said Jon Tellekamp, Boston-based chief underwriting officer, construction and energy, for Axa XL, a unit of Axa SA.

The power is used to run data centers’ complex electronics and keep equipment cool.

The power requirements are “definitely bringing some unique challenges,” Mr. Tellekamp said, especially given that many data centers and campuses are in rural areas, which may lack extensive or robust infrastructure.

“For the clients that we work for, that’s usually No. 1. They won’t buy land or do anything until they have the energy tied up,” Suffolk’s Mr. Hart said.

The energy requirements lead to interplay between different departments within an insurer, sources said.

“We do operational energy in our energy vertical, we do the construction of energy facilities in our construction vertical,” said Tobias Cushing, Hartford, Connecticut-based head of construction at Zurich North America. “It’s different by country and it’s different by company.”

The scale and demands of data center projects have created the need for cooperation among contractors in a growing number of cases.

“You’re seeing joint ventures being formed with multiple large contractors in order to get the work done” on the largest of projects, Mr. Tellekamp said. “You’re seeing more joint ventures being formed,” sometimes with three contractors.

The sector shows no signs of slowing down, said Zurich’s Mr. Cushing.

“I feel like that’s going to sustain us for years,” he said. “This data center infrastructure is here to stay and will constantly be getting built and upgraded.”

Big tech taps nuclear power for energy

The energy demands of the new breed of data centers are so great that end users such as Microsoft Corp. and Meta Platforms Inc. are turning to nuclear power to meet their needs.

Microsoft signed a 20-year agreement last September that will involve the restart of Unit 1 at Pennsylvania’s Three Mile Island, which owner Constellation Energy Corp. renamed The Crane Clean Energy Center.

On June 3, Meta signed a 20-year power purchase agreement with Constellation for the output of the Clinton Clean Energy Center, a nuclear power plant in Clinton, Illinois.

“It’s really interesting just to imagine that (nuclear power is) even on the boards and the demands are such that it’s being considered,” said Jim Dunn, Atlanta-based U.S. construction practice leader for Marsh LLC.

“It’s going to be something that is going to test the market a little bit,” said Jon Tellekamp, Boston-based chief underwriting officer, construction and energy, for Axa XL, a unit of Axa SA.

As a French-owned company, with France mostly powered by nuclear reactors, “There is, at the corporate level, an understanding and pretty strong knowledge of the nuclear space,” Mr. Tellekamp said.

“The big question mark that we’re all looking at is the whole nuclear aspect,” said Tobias Cushing, Hartford, Connecticut-based head of construction at Zurich North America. “We’re very open to looking at that, and we’re very well positioned to do it as someone who’s already a signatory to the nuclear pool in the U.S. for liability.”

Zurich is a member of American Nuclear Insurers, a voluntary joint underwriting association established in 1956 and headquartered in Glastonbury, Connecticut. ANI writes nuclear liability insurance for nuclear facilities in the United States.

The association comprises 21 companies and is open to any domestic property/casualty insurer licensed to do business in at least one U.S. jurisdiction.