One of the largest impacts to come out of all these large-scale events is that businesses and consumers across the world are treating Climate Change as a true Global emergency and are looking at sustainability as a hygiene factor.
With so many businesses now focused on sustainability the changes coming to the market over the next few years will be substantial. It is now time for insurers to see sustainability as a hygiene factor rather than somewhat of a footnote in their processing. Recent surveys were conducted to establish the depth of sustainability in the market and out of all the firms surveyed, only around 25% had looked at sustainability at a supply chain level. We believe that there is the same trend in the insurance sector. This means there is a large opportunity for insurers to push forward and be at the forefront of environmental change.
It all starts with data. Data availability will be a large driver in the ability to track CO2 benefits as a baseline measure will be key. Insurance firms will need to establish how much CO2 they are using in the property claims market and where this CO2 is prevalent. Is it in replacing goods inside policy holder homes, repairing large scale damage such as escape of water and fire, or is it through poor processing meaning more visits and touching points with customers? Answering these critical questions will mean being able to tackle the root cause.
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With the right data, insurers can establish what areas are having a critical impact on their overall carbon footprint and begin tackling those areas following specific initiatives.
Materials is one of the largest impact areas on CO2 emissions for household repairs, as materials generate a large amount of during production. Just taking the top three core materials of concrete, steel, and timber, the first two alone equate to 47% of emissions from material consumption. Focusing on utilisation of recycled materials will go a long way in reducing carbon footprint. Recycled steel alone can equate to a 75% energy saving as just six scrap vehicles provide enough steel to build a 2000sqft house. Thankfully, steel is one of the only materials in the world with a 100% recyclable structure, meaning it has a complete circle of life, and can be recycled multiple times with no impact on quality of material.
Furthermore, opting for specialist waste management companies can also ensure that waste is not just taken straight to landfill and instead can be recycled following specific processes. Some insurers that have adopted this approach to waste management have seen upwards of 85% of all their waste materials recycled by using a specialist firm.
Repair v Replace
The other key area of impact is opting for Repair over Replace methodologies. This discipline is making headway in the motor insurance space but has not yet been adopted as much in home insurance.
If insurers adopt a supply chain with smart repair solutions, content claims for items such as TVs or white goods could all be repaired in the policy holder’s home removing the need for CO2 heavy collection vehicles, warehouses for storage and repair and return deliveries. It also means insurers are not covering the cost of items as new, and instead only pay for time and materials.
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Insurers can also ensure that they utilise repair partners that have sustainable initiatives during repair, by holding their supply chain to stricter recycle and reuse processes. For example, on an Escape of Water repair, instead of doing a “strip out” of a large amount of the existing materials such as wooden flooring, cement and plaster they could use alternative drying methods with the plaster still in place, reducing “strip out” time and the need for new materials. This example also drives lower cost as the repairer doesn’t need to remove and replace as much material and this approach can deliver savings upwards of 40%.
If replacing the item is the only option, then providing more environmentally friendly solutions to save future energy for households would be a huge step forward in ensuring a more carbon neutral supply chain. Choosing to go one step further when replacing items will drive sustainability for Insurers. If they chose to replace broken appliances with new energy A rated appliances (an A rated Fridge Freezer can save 140kg/CO2 per annum), provide more insulation when repairing critical foundations in buildings repair (ensuring adequate insulation can save up to 2 tonnes of co2 per annum), or providing energy efficient eco boilers or heat pumps will mean that the items not only last longer, but they will also have a much lower impact on carbon footprint.
Travel has a huge impact on carbon footprint, with studies estimating that 228g of CO2 are produced for every mile driven by a fuel-based vehicle. Travel emissions can be lowered by reducing the need to visit the claimant’s home. By utilising e-Claims solutions to gather evidence and information such as imagery or live feeds to show the extent of damage means that there is a lesser need for face-to-face appointments for loss adjusters or the repairers doing inspections prior to carrying out the work.
Whilst not directly the answer to all CO2 issues use of electric vehicles and better driving techniques tracked and mapped using telematics can also reduce CO2 emissions however the power supply for the electric vehicles will also need to be sourced from sustainable energy providers, as opposed to providers that utilise high quantities of fossil fuels for power.
The Procurato Way
There are several options for personal and commercial property insurers to reduce their carbon footprint. We can help you to be at the forefront of carbon neutral change in the insurance industry, bringing you the highest expertise from the right partners.
We’ll review and analyse your current CO2 emissions and help identify where in the supply chain you can improve, connecting you to suppliers who are putting sustainability at the forefront of their strategies. To find out more please contact us.