Insurers 'Walk The Walk' On Environment

Selling "green" insurance products might be just another niche for a carrier. But to effectively market coverage for such exposures to true believers, it helps to "walk the walk" if you're going to "talk the talk" about the need to confront climate change, leading players in this growing field say.

There are a growing number of global insurers making the commitment to not only create the kind of insurance products the world is calling for to support a more sustainable environment, but also to make environmental sustainability an integral part of their corporate culture.

For example, for the past few years Allianz has produced a sustainability report that "describes our work to build value for our customers, employees, shareholders and the community," Michael Diekmann, chair of the German-based insurer, wrote in the document.

The report, which measures the insurer's environmental management, offers examples on how it is working to become a better steward of the world outside its office. Spotlighted is the carrier's climate change action plan, its development of sustainable products and services, and efforts to provide micro-insurance to developing nations.

"Innovation is crucial to Allianz," the report says. "Without it we would not be able to survive in an industry that is getting more competitive, more price-driven and more demanding."

Whether the company's position influences brokers in the industry is hard to say, said Steve Bushnell, senior director of commercial insurance for Fireman's Fund, an Allianz company. But as the green movement grows, agents and brokers will want to be seen as environmental advocates, he added.

He said the major brokerages have green practices because "they see where the trends are going. It is only a matter of time before smaller firms see this and pick up on the products and become sensitive to the environment. Agents will want to be identified with those trends and those issues."

Zurich developed its environmental products by first understanding what sustainability is as well as what it means to the global climate, then developing specialized insurance products to aid the economic and social structure, noted Lindene Patton, chief climate product officer for Zurich Financial Services.

While part of the aim is to have an impact on improving the environment, from the business side it means building incentives for sustainable behavior to help people make good decisions about risk, Ms. Patton explained.

"Some brokers have spent a fair amount of time looking at this issue, but it is not uniform," said Ms. Patton. "I think the brokerage community can spend more time learning about sustainability issues, and some of them are being encouraged to do so by customer demand."

She added that "we all have something to learn about sustainability, and with more programs being put together, like Zurich's and across the industry, we should improve the overall knowledge base for all of us."

"I think [creating green insurance products] is gaining some steam," said Robert Wendel, senior manager in actuarial insurance solutions for Deloitte Consulting.

"I think the insurance industry is beginning to see this as not just a good thing to do from a global community perspective, but that it is good for business, too," he added. "Slowly but surely, some of the regional companies are beginning to look at what role they should play in driving green insurance across the country."

He said that "in large part, insurers are in the driver's seat and could very much push the American construction community to adopt many of these green approaches. It could, in fact, do very well for the insurance industry to begin to change its reputation by taking a leadership position in some of these areas."