Banks seek loan protection as data centre risks strain insurers

Barclays and HSBC have explored credit insurance to manage exposure to AI infrastructure lending, according to the Financial Times. Barclays has sounded out insurers about default protection on more than US$10 billion of loans, while HSBC has considered cover for data centre debt. JPMorgan Chase examined the approach but decided against it. Banks face concentration limits as hyperscalers seek larger financing packages.

Credit insurance typically transfers 20% to 50% of a bank’s exposure to insurers, freeing capacity for additional lending. Rising credit default swap costs have made insurance an alternative for US lenders. However, premiums for data centre exposure are running at 50% to 70% of what banks earn on the covered portion of their loan portfolios, according to the Financial Times.

Project finance credit insurance providers have expanded to more than 70, including AIG, Chubb, and Axa, but available capacity remains constrained. A Willis Towers Watson survey released in May 2026 found several insurers were approaching sector limits or were already full on data centre exposure. Specialist brokers must increasingly match loans with selective insurer appetite. The insurers approached by Barclays and HSBC have not been named, and several transactions remain exploratory.