The global data center industry is experiencing unprecedented growth. According to Fortune Business Insights, the global data center market reached $269.79 billion in 2025. This market is projected to grow to $300.64 billion in 2026, and then more than double to $699.13 billion by 2034, reflecting a compound annual growth rate (CAGR) of approximately 11.10%. North America accounted for roughly 38.5% of the global market share in 2025. The capital flowing into this sector is staggering: McKinsey estimates that companies across the compute power value chain will need to invest $5.2 trillion into data centers by 2030 to meet worldwide artificial intelligence (“AI”) demand, with an accelerated scenario requiring as much as $7.9 trillion in capital investments. Goldman Sachs projects total hyperscaler capital expenditure from 2025 through 2027 will reach $1.15 trillion—more than double the $477 billion spent from 2022 to 2024—and anticipates roughly $7.6 trillion of cumulative AI-related capital expenditure between 2026 and 2031. BloombergNEF reports that the 14 largest publicly owned data center operators globally are projected to spend close to $750 billion in capital expenditures in 2026 alone, up from approximately $450 billion in 2025. The data center industry has become a behemoth in a shockingly short amount of time.
Continue Reading The Data Center Boom and D&O Insurance: Navigating Uncharted Liability Exposure in a High-Growth Industry
Parent Company Beware: Subsidiaries’ Fidelity Bond Claims May Belong to FDIC in Receivership
In March 2023, we wrote about the failure of Silicon Valley Bank (“SVB”) and potential implications of its takeover by the Federal Deposit Insurance Company (“FDIC”). As we noted then, the FDIC, as receiver for SVB, has broad discretion to manage the bank’s assets and liabilities, including selling assets for the benefit of creditors and bailing out the distressed bank.
Continue Reading Parent Company Beware: Subsidiaries’ Fidelity Bond Claims May Belong to FDIC in ReceivershipNon-Deal Exposure: Practical Tips for Enhancing Insurance Coverage For Private Equity Funds and Portfolio Companies
When private equity fund managers think about insurance, they usually think of Representations & Warranties Insurance (“RWI”). That makes sense—RWI covers representations baked into the deal itself that are front of mind when buying and selling portfolio companies (“PortCos”). But once a deal closes and a PortCo continues operations under new PE ownership, a whole new set of operational issues unrelated to pre-closing representations can surface, giving rise to potential claims under a host of different lines of insurance, including directors and officers (“D&O”), errors and omissions (“E&O”), cyber, crime/fiduciary, general/limited partner (“GP/LP”), commercial general liability (“CGL”), and property policies, among others. To make matters worse, coverage gaps between policies issued at the fund level and the PortCo level, finger-pointing between insurers, lapsed policies, and inadequate coverage can result in substantial financial losses for the PE Fund and PortCo alike.
Continue Reading Non-Deal Exposure: Practical Tips for Enhancing Insurance Coverage For Private Equity Funds and Portfolio CompaniesMaximizing Insurance Coverage for Emerging ‘Tobacco Surcharge’ ERISA Litigation
Employers nationwide are experiencing a new wave of ERISA litigation targeting so-called “tobacco surcharges” on employees enrolled in employer-sponsored health plans. Because these lawsuits are generally brought as putative class actions, the stakes can be significant and some multi-million dollar settlements have already become public. But employers need not face the costs of defending and resolving these ERISA cases alone. Fiduciary liability insurance policies generally require insurers to pay for defense costs incurred in ERISA class actions and, depending on their terms and conditions, fiduciary liability policies may cover most, if not all, of any eventual settlements or judgments. Employers should carefully review reservation of rights letters and resist efforts by fiduciary liability insurers to improperly resist or limit coverage for tobacco surcharge litigation.
Continue Reading Maximizing Insurance Coverage for Emerging ‘Tobacco Surcharge’ ERISA LitigationInsurance Industry’s Use of AI: A Fair or Unfair Claim Settlement Practice?
The insurance industry has been swift to adopt artificial intelligence (“AI”). According to consulting firm McKinsey & Company, 76% of insurers surveyed have already begun using generative AI in their day-to-day operations. [1] This adoption spans the different facets of insurers’ work cycles, including claims, underwriting, legal, and risk management. Policyholders and their attorneys must remain aware of the potential pitfalls of AI implementation, particularly as it pertains to claims management.
Continue Reading Insurance Industry’s Use of AI: A Fair or Unfair Claim Settlement Practice?When Geopolitic Events Disrupt the Cloud: Insurance Coverage for Data Center Supply Chain Losses in a New Era of Conflict
A New Risk Landscape for AI Infrastructure
Escalating tensions involving Iran—including maritime incidents affecting oil transport and alleged cyber and physical targeting of digital infrastructure in the Middle East—highlight a growing and underappreciated risk for AI-driven data centers: disruption that originates far beyond the insured’s own operations. These developments are not occurring in a vacuum. They come at a time when hyperscale data center expansion has become a central driver of economic growth in the United States, as well as a national security priority, underpinning everything from cloud computing to artificial intelligence development.
Continue Reading When Geopolitic Events Disrupt the Cloud: Insurance Coverage for Data Center Supply Chain Losses in a New Era of ConflictFifth Circuit Issues Pro-Policyholder Ruling that ADR Proceeding Triggered Insurer’s Duty to Defend and Indemnify
On October 20, 2025, the United States Court of Appeals for the Fifth Circuit issued a significant decision clarifying that an insurer’s duty to defend under Texas law extends to a contractually mandated alternative dispute resolution (ADR) proceeding.[i] The Fifth Circuit reversed a magistrate judge’s dismissal of BPX Production Co.’s (BPX) coverage claims, holding that an ADR proceeding triggers an insurer’s duty to defend and indemnify under a commercial general liability (CGL) policy—thus rejecting the insurer’s argument that a “suit” was required. Further, the Fifth Circuit held that an insurer’s conduct can waive conditions to coverage. This decision provides important guidance for corporate policyholders navigating insurance disputes involving an ADR proceeding, policy defenses asserted by insurers, and the assignment of insurance rights to maximize an insurance recovery in the circumstance of a bankruptcy.
Continue Reading Fifth Circuit Issues Pro-Policyholder Ruling that ADR Proceeding Triggered Insurer’s Duty to Defend and IndemnifyThe Archdiocese Resurrects Faith in the New York Court System: New York Supreme Court Issues Another Decision Allowing a New York Policyholder to Seek Damages for Bad-Faith Claim Handling
Last month, the New York Supreme Court issued a well-reasoned order denying the Archdiocese’s insurers’[1] motion to dismiss its claim against them for breach of the covenant of good faith and fair dealing, holding that the policyholder’s complaint sufficiently alleged its Insurers claim handling conduct amounted to bad faith.[2] The Order is part of a new trend in New York that allows bad-faith claims to proceed when styled as claims for breach of the duty of good faith and fair dealing, where the conduct supporting the alleged bad-faith claim is independent of the alleged conduct giving rise to a breach of contract claim, and the policyholder sufficiently alleges damages arising from the bad-faith conduct.
Continue Reading The Archdiocese Resurrects Faith in the New York Court System: New York Supreme Court Issues Another Decision Allowing a New York Policyholder to Seek Damages for Bad-Faith Claim HandlingNorth Carolina: Policyholders Not Contributorily Negligent for Agent’s Misstatements
In a pro-policyholder ruling, the North Carolina Supreme Court recently held that a homeowner’s claims against an insurance agent for negligence and gross negligence, seeking punitive damages, survived a motion to dismiss based on the insurance agency’s course of dealing with the homeowner. The decision, Jones v. J. Kim Hatcher Insurance Agencies, Inc., et al., is a win for policyholders and demonstrates how the North Carolina Supreme Court is willing to balance the normal expectation that a person must read what he signs with an insurance agency’s role in inducing the policyholder to do otherwise.
Continue Reading North Carolina: Policyholders Not Contributorily Negligent for Agent’s MisstatementsAmerica’s Aging Dams and Other Infrastructure is an Urgent Insurance Coverage Issue
Natural disasters are becoming more frequent, more severe, and more destructive. No part of the United States is entirely immune from some combination of tornadoes, fires, droughts, earthquakes, freeze events, and hurricanes. Indeed, 2024’s “extraordinary” hurricane season saw Hurricanes Helene and Milton devastate swaths of the Southeastern United States from Florida to North Carolina.[1] This trend has continued in the early days of 2025 with wildfires in California and winter storms in the South and along the East Coast causing devastation, supply chain disruptions, and, reportedly, tens of billions of dollars in insured losses.
Continue Reading America’s Aging Dams and Other Infrastructure is an Urgent Insurance Coverage Issue