Sustainability in claims management requires greater collaboration between insurance carriers, brokers, loss adjusters and suppliers to manage the speed and cost and speed of repairs, but client engagement is key in managing expectations around delivering sustainable solutions.
In an expansive discussion of ‘The challenges in adopting a sustainable approach to claims’ at the Crawford Technical Claims Forum in London, senior figures from Crawford and the wider insurance industry explored how regulatory drivers, cost considerations and definitions of sustainability could be addressed by claims professionals.
With the industry under growing pressure to align with carbon reduction targets and meet client demands for more sustainable solutions, it needs to consider how stakeholders can collaborate on sustainable practices in the absence of mandatory regulatory frameworks.
“With around 2,400 ESG-related regulations around the world, sustainability is an issue every business is grappling with. Insurance policies and claims processes need to reflect the sustainable approach every business will ultimately be obliged to address and report on,” said Paul Handy, executive director, Crawford GTS International.
A major concern is the likely cost to the insurance industry and its clients of implementing more sustainable practices. Due to a common perception that sustainability initiatives cost more to deliver, it can be challenging to get them off the ground.
“Cost is something we need to get a handle on in the adjusting space. Where we are sourcing sustainable products or materials or adopting a new design technique, it can incorporate delay and increase cost,”
warned Handy.
However, as Matthew Renshaw, sustainability consultant with Crawford UK, observed, sustainability is a wide-ranging subject, encompassing areas such as waste management, loss mitigation, biodiversity loss, pollution control and energy consumption.
“Within those areas there are cost-negative and cost-neutral solutions available, so I’d like to see us changing the mindset around sustainability, particularly in relation to the issue of cost.”
Stakeholder engagement is a key element of addressing negative perceptions around sustainability, both within the claims community and throughout the insurance supply chain.
Paul Redington, a regional major loss lead at Zurich Insurance, said the industry should be initiating discussions around sustainability and resilience at the point of a property claim being made.
“Some customers are shaping the conversation themselves, but others might not have a sustainability agenda, so there's an education piece that involves looking beyond the claim to see how that building will perform after we finish a reinstatement project.”
The industry must grasp the opportunity to educate stakeholders about sustainability and apply ESG models to the adjusting process and throughout the supply chain, said Emily Morine, director of London Markets, Crawford Canada.
“One of our domestic insurers has a project around the economic benefits of repair versus replace. When we're talking about reducing waste and using sustainable materials, we can potentially offset the extra cost of replacing everything with some innovative repair methods.”
Morine emphasised the need to embrace new technologies to maintain a speedy claims process and get insureds back up and running while also incorporating sustainability, through greater use of self-service and messaging tools to eliminate much of the time-consuming paperwork.
Regulatory challenges around sustainability are most likely to be seen in the property restoration supply chain and wider construction industry, said Renshaw, particularly with the Biodiversity Net Gain (BNG) regulations that became mandatory in the UK in February.
However, many of the current insurance industry initiatives are ahead of regulatory change, said Handy, exploring how the increased cost of building back better with sustainability in mind could be covered under insurance policies.
In Canada, companies are already establishing those ESG frameworks themselves, with 60% of Canadian insurers considering ESG factors in their underwriting and product development, according to Morine.
The panel also discussed the need for sustainability in the claims process to go hand-in-hand with resilience measures for flood and quake risks.
“This is where the claims community can really help. The maturity of global regulation and approaches to sustainability is a patchwork quilt, but as a global claims management organization we can influence best practice by working with our clients to understand their drivers,” said Handy.
