AI data center owners are moving construction risk into their own insurers. Here's what changes for the GC signing the contract
Marsh predicts 'explosive growth' in owner-controlled captive insurers covering AI data center construction, surety, and liability. That shifts who actually stands behind a subcontractor default or a builders-risk claim on the job.
Marsh, the world's largest insurance broker, says it expects "explosive growth" in owner-controlled captive insurers covering AI data center construction — meaning the risk on builders risk, surety, property, and liability for these jobs is increasingly staying in-house with the developer or tech company footing the bill, instead of going to a traditional carrier. For a GC building one of these projects, that changes who you're actually dealing with when something goes wrong on site.
What is a captive insurer, and why now?
A captive is an insurance company a corporation sets up and owns to cover its own risk instead of buying every policy off the shelf from a traditional insurer. Michael Serricchio, Marsh's US and Canada captive solutions leader, says he's predicting "explosive growth in the use of captives to take on the portfolio risks for data centers," and that "risks for build-outs, construction, surety, property and liability will end up in their captive." His reasoning is straightforward: AI data centers are now bigger, in insured value, than anything the traditional property-casualty market has had to price before, and owners who've paid years of premiums without ever filing a claim don't want to keep doing that when they can retain the risk — and the premium — themselves.
What does this mean for subcontractor default risk?
This is the part that lands directly on a GC's desk. Guidance from the Associated General Contractors and from insurance broker Gallagher, both written specifically about data center construction, flag the same pattern: many owners on these jobs decline to require the GC to carry subcontractor default insurance (SDI) or subcontractor bonds, and rely instead on contractual indemnity provisions — language that shifts loss back onto a party by contract rather than through an insurance policy or a surety bond.
| GC-controlled SDI or bonding | Owner-captive-only, contractual indemnity | |
|---|---|---|
| Who decides how a default is handled | The GC, using its own policy | Whoever controls the captive and the contract terms |
| Speed of response | GC can swap subs and manage recovery on its own timeline | Depends on negotiating or litigating the indemnity clause |
| Coverage if a sub can't pay | Insurance or bond pays out regardless of the sub's finances | Only as good as the defaulting sub's ability to actually pay |
| Who bears the risk of a coverage gap | Spread to the insurer or surety | Concentrated on the GC unless the contract is airtight |
That last row is the one worth sitting with. Contractual indemnity is only as strong as the paper it's written on and the solvency of whoever owes the money — it doesn't replace an actual pool of capital sitting behind the risk the way a bond or an SDI policy does.
How big is this, in dollar terms?
Marsh alone manages about 1,900 corporate captives that collectively wrote roughly $79 billion in premium in 2025, and only about $11.5 billion of that was ceded to reinsurers to cover the largest risks. The rest — the large majority — stayed with the companies that own the captives. That's the scale Serricchio is describing when he says data center construction, surety, property, and liability risk is headed the same way: retained in-house rather than spread across the traditional insurance market.
What should a GC actually check before signing?
Before you bid or sign a data center contract where the owner is running its own captive, get answers to these in writing:
- Who owns and controls the captive backing builders risk, property, and liability on this specific project — the owner, a parent company, or a joint venture?
- Is SDI or subcontractor bonding still required, or is the owner substituting contractual indemnity? If it's indemnity only, get your risk manager or construction counsel to review the clause before you sign, not after a sub defaults.
- What's the captive's claims-handling process — reserves, adjusters, decision-maker, timeline — and can you get that in the contract rather than taking it on faith?
- Does your own bonding and SDI program still apply to your sub-tier, or has the owner mandated a different structure for this job specifically?
The takeaway
None of this makes data center work a bad bid — it's still the highest-velocity, highest-margin construction segment going right now, and the labor and equipment bottlenecks already stalling those schedules aren't going away either. But an owner-run captive is a different counterparty than a commercial insurer, with different incentives about how fast a claim gets paid and how much protection you actually have if a subcontractor walks. Ask the four questions above before you sign, not when you're already trying to replace a sub mid-job.
Forward this to whoever on your team is pricing the next data center bid.
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- What is a captive insurer, and why is it showing up on AI data center jobs?
- A captive is an insurance company a corporation sets up and owns to cover its own risk instead of buying every policy from a traditional carrier. Marsh's US and Canada captive solutions leader, Michael Serricchio, says AI data center owners are turning to captives because these projects are now bigger than anything traditional insurers have priced before, and owners who've paid years of property premiums without filing claims want to keep that money in-house instead.
- Does this change who covers a subcontractor default on a data center job?
- It can. Guidance from the Associated General Contractors and from insurance broker Gallagher on data center construction both note that many owners on these projects decline to require the GC to carry subcontractor default insurance or bonding, relying instead on contractual indemnity language — which offers weaker, slower protection than an insurance policy or a surety bond if a sub defaults.
- How big is the shift toward captives, in dollar terms?
- Marsh alone manages roughly 1,900 corporate captives that wrote about $79 billion in premium in 2025, and only about $11.5 billion of that was passed on to reinsurers for the largest risks — meaning most of it stayed with the companies that own the captives. Serricchio is forecasting 'explosive growth' in that model specifically for data center construction, surety, property, and liability risk.
- What should a GC ask before signing a data center contract where the owner uses a captive?
- Ask who owns and controls the captive backing builders risk, property, and liability coverage; ask directly whether subcontractor default insurance or bonding is still required, or whether the owner is substituting contractual indemnity instead; and get the captive's claims-handling process — reserves, adjusters, timeline — in writing before you need to use it, not after a sub walks off the job.
- Is this trend limited to data centers, or will it spread to other construction sectors?
- So far the reporting is specific to AI data centers and the adjacent renewable-energy buildout, because those are the only projects currently large and repetitive enough for an owner to justify running its own insurer. A GC working outside that niche isn't facing this yet, but it's worth watching if data center work is on your pipeline.