Why Climate Stress Coverage Matters for Data Centers
🗸 Extreme cold can disrupt the grid
Deep freeze events can lead to mandatory grid shutdowns, creating operational disruption and financial stress.
🗸 Extreme heat increases operating costs and strains operations
Heat waves can drive up cooling costs and strain operations, leading to NDBI exposure that can be excluded from traditional property programs.
🗸 Parametric protection supports fast, objective compensation
Sustained extreme temperatures can cause equipment failures, reduced productivity, and increased infrastructure stress. Parametric insurance provides rapid and objective compensation, helping organizations absorb losses and reinvest promptly.
Covered data center assets:
- Under construction sites
- Operational sites
- Large-scale facilities
- Small-scale facilities (e.g., edge)
- Adjacent power plants, and more
Product Overview
Descartes’ parametric climate stress solution provides cost-effective, customized protection that triggers automatically when temperatures exceed predefined thresholds—delivering targeted support for NDBI exposure and other financial impacts that may be excluded from traditional property programs.
- Risk covered: Extreme heat or cold
- Index: Minimum or maximum temperature
- Limit: Up to $80 million per contract
- Availability: Global
- Coverage type: Single or multi-location
- Insured period(s): Customized to client needs
How the Climate Stress Index Works
🗸 Temperature-based trigger
The index is based on daily maximum or minimum temperature. Depending on the structure, the index may be based on:
- Number of consecutive hot/cold days
- Number of total hot/cold days over the period
- Average or cumulative excess temperature over a given period
The structure is customizable to reflect local risk dynamics and sensitivity.
🗸 Objective data to determine payouts
The policy relies exclusively on objective, verifiable, high-quality weather data to determine payouts, including (depending on availability and reliability):
- Physical weather stations near insured sites that meet strict quality and continuity standards
- Publicly available gridded climate datasets to ensure consistency across insured areas
The data source is selected to guarantee transparency, traceability, and trust, and is clearly defined in the policy before coverage starts.
Interested in a solution?
Contact our commercial team.
FAQ
Why is coverage for extreme heat and/or cold necessary?
Extreme heat and/or cold, especially when sustained over several consecutive days, cancause equipment failures, reduced productivity, and increased stress on infrastructure. Parametric insurance provides rapid and objective compensation, allowing corporations to absorb losses and reinvest promptly.
What damages are covered?
The policy covers losses and the associated financial impact caused by extreme temperature conditions during the insured period, typically
defined as a series of days exceeding a critical temperature threshold. If such conditions occur at a level that surpasses the predefined strike, the
policy pays out up to a maximum payout limit based on the intensity and/or duration of the extreme temperature.
How is the index calculated?
The index is based on the daily maximum or minimum temperature. Depending on the structure, the index may be based on:
• Number of consecutive hot/cold days
• Number of total hot/cold days over the period
• Average or cumulative excess temperature over a given period
The structure is customizable to reflect local risk dynamics and sensitivity.
What data is used?
The policy relies exclusively on objective, verifiable and high-quality weather data to determine payouts. Depending on availability and reliability,
this may include:
• Physical weather stations located close to the insured sites, provided they meet strict quality and continuity standards
• Publicly available gridded climate datasets that ensure consistency across all insured areas
In all cases, the data source is selected to guarantee transparency, traceability and trust in the claims process, and is clearly defined in the policy before coverage starts.
How does the claims process work?
1) The client notifies their broker, Descartes and/or risk carrier of the loss.
2) After the event, we collect the final data from the certification agent, ensuring the most accurate level of information to assess if the intensity of the event has triggered the policy and to what payout threshold.
3) Using the collected data, we then create an event report stating the maximum monetary amount to be recovered based on the structure outlined in the client’s policy.
4) After receipt of the event report, the client will issue a Declaration of Loss Statement to Descartes and/or the risk carrier.
5) As defined within the policy, after receipt of the Declaration of Loss Statement, the client will receive the payout in agreement with the policy terms, allowing them to accelerate continuity of operations.
Quote requirements
• Location
• Loss History
• Policy Limit
