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Digital infrastructure: 3 strategies to contain costs

Learn how premium finance, loss studies, and surety bonds can help digital infrastructure projects contain costs, preserve capital and manage risk.

06/11/2026 · 5 minute read

Digital infrastructure projects represent some of the most capital-intensive undertakings in today’s economy, with trillions of dollars expected to be invested in projects globally by 2030. 

As these projects grow in both scale and complexity, finding effective ways to contain costs and deliver on time, while maintaining robust risk mitigation standards, becomes essential — but also challenging. It requires a strategic approach that balances risk transfer and capital preservation initiatives. 

Organizations have a number of options that can help them contain costs throughout the buildout and operational phases of a digital infrastructure project. By leveraging innovative solutions such as premium finance, detailed loss studies, and surety guarantees, owners and developers can optimize their insurance spend, preserve liquidity, and better align coverage with evolving risk profiles.

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Unlocking capital efficiency through premium finance

Insurance costs, particularly for large-scale projects, can represent a significant financial commitment that is often required up front. These premiums can tie up substantial capital that might otherwise be deployed toward growth initiatives or operational improvements.

Premium finance offers project stakeholders a strategic solution that enables them to spread their insurance premium payments over time rather than pay a lump sum at policy inception. This approach frees up cash flow and allows companies to preserve liquidity for other critical business needs.

Structuring premium payments to align with project cash flow

Insurance programs for digital infrastructure projects can be complex, often encompassing property, casualty, builders’ risk, and specialized coverages, each contributing to significant premium obligations.

Instead of paying the premium outright, insureds can borrow money against their program through a premium finance agreement. The lender advances the insurance premium to the insurer on behalf of the insured, and the insured then repays the lender according to a bespoke schedule that aligns with cash flow preferences. This tailored repayment structure tends to be particularly advantageous for digital infrastructure projects where revenue streams may fluctuate due to construction timelines, phased operations, or market conditions.

A defining benefit of this financing model is the ability for insureds to retain use of cash that would have otherwise been used for insurance payments, often translating into greater financial agility and enabling insureds to allocate capital toward growth and innovation.

Further, consolidating multiple insurance payments into a single installment streamlines administrative processes and mitigates the risk of inadvertent coverage lapses.

Marsh’s team of premium finance specialists works with individual insureds to determine the most appropriate solution for their specific circumstances, helping companies present their proposals to specialized markets and negotiate terms that reflect each client’s unique risk profile. This includes navigating the nuances of multi-year policies, complex international placements, and evolving market conditions to secure financing solutions that align with broader risk management and capital strategies.

Right-sizing insurance programs through a detailed loss analysis

The sheer scale of digital infrastructure projects, and the complexity and magnitude of a plethora of potential exposures — from natural catastrophes to operational disruptions — directly influences the size and cost of insurance programs required.

But for project owners and developers, understanding the extent of coverage required for their project might not be straightforward, especially as exposures and their magnitude might fluctuate and the race for innovation can influence mitigation strategies in place to secure reliable services. Under-insuring exposes stakeholders to potentially devastating financial shortfalls in the event of a loss, while over-insuring can lead to unnecessarily high premiums or less appealing conditions that strain project budgets.

Detailed loss studies, such as our probable maximum loss (PML) analysis, can help owners and developers understand their underlying exposures in order to strategically size their insurance program, with the aim of optimizing premium spend and enhancing the project’s financial stability and attractiveness to investors and lenders. A ground-up and detailed loss study can offer additional leverage in critical negotiations for requirements, investments, ratings, and lenders, so internally and externally stakeholders can map and understand potential exposures tailored to the subject project.

Dynamic risk assessments for evolving project exposures

A detailed loss study can go beyond simply valuing property damage; it incorporates unique risk factors, such as geographical location, soil conditions, building materials used, and existing loss control measures.

Aside from accounting for direct costs, such as property damage, our detailed PML study also takes into consideration indirect costs, such as expediting repairs to get back on schedule, ongoing operational expenses during downtime, and costs related to a delay in startup (DSU). This comprehensive approach provides a fuller picture of financial exposures, enabling more informed decisions about insurance coverage and risk management.

Detailed PML studies are especially effective for digital infrastructure projects, whether they are building a hyperscale data center or a smaller campus. The dynamic nature of construction schedules and phased handovers means that risks evolve over time; by analyzing cost accumulation and project timelines, a comprehensive PML study can analyze fluctuating financial impacts to inform needed insurance program adjustments.

Marsh’s dedicated risk consulting team works closely on detailed loss studies to provide owners and developers with detailed financial loss estimates that go beyond typical insurer assessments. These studies aim to support insureds in negotiating coverage terms, setting appropriate first loss limits or limits of liabilities, and aligning coverage with risk appetite. Further, carrying out a detailed loss study provides insureds with critical information to shape the narrative objectively with lenders and investors that might pressure them to purchase additional, and often unnecessary, limits.

Enhancing financial flexibility through surety bonds

As with many large-scale developments, digital infrastructure owners and developers often need to provide collateral to secure contractual obligations throughout their projects' lifecycles. This collateral serves as a financial guarantee to counterparties that the organization will fulfill its commitments.

Traditionally, letters of credit (LOCs) were the primary instrument used to provide this collateral. While effective at providing security, these bank-issued guarantees typically require the posting of significant collateral, which can tie up credit lines and constrain an organization’s liquidity and working capital. For capital-intensive digital infrastructure projects, such as hyperscale data centers, these collateral requirements can immobilize tens or even hundreds of millions of dollars. Locked-up capital can reduce flexibility and limit the organization’s ability to invest in growth, procurement, or operational needs, potentially slowing project timelines and affecting overall financial stability.

Preserving liquidity through surety products

Surety guarantees, by contrast, do not require collateral, which makes them a liquidity-preserving alternative that allows developers and contractors to fulfill counterparty security requirements while freeing up capital that can be redirected towards the organization’s critical needs. Surety can cover a wide range of project needs, including securing lease obligations, power purchase guarantees, and municipal site improvements.

A decision to access surety typically pivots on a risk assessment that determines where these instruments are required and quantifies exposures. Early engagement of surety specialists can help organizations select tailored surety solutions, right-size bond amounts, and ensure that programs align with lender covenants. Acceptance of surety guarantees by counterparties often depends on familiarity with surety products as well as the way the bond is designed.

Marsh’s dedicated surety specialists work closely with organizations, including digital infrastructure companies, to help them access surety markets and demonstrate the effectiveness of the product to counterparties.

In cases where counterparties are reluctant to accept surety bonds directly, there is the possibility of arranging bank-fronted solutions that still free liquidity under bank lines, offering a flexible, cost-effective alternative to traditional LOCs.

Taking a strategic approach to containing costs

Managing project costs on digital infrastructure projects requires a blend of financing creativity, rigorous risk analysis, and flexible collateral solutions. These three approaches can help preserve liquidity, align insurance with real exposures, and protect project timelines.

Marsh’s team of specialists have deep expertise into the measures that can help digital infrastructure owners and developers contain costs and work with organizations to help evaluate options and tailor practical, cost-effective plans.

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