Insurers must recognize the financial impact and benefit of investing in sustainable technology. "Given the raison d'etre of the insurance industry is risk, despite sustainability's macro-economics being hard to qualify and quantify at a corporate business level, insurers need to take a more active role."

1. AM BEST'S MONTHLY INSURANCE MAGAZINE
ADVERTISEMENT
Gates Ouimette
Technology
Sustainability
Insurers must recognize the financial impact and benefit of investing in sustainable
technology.
GATES OUIMETTE | DECEMBER 2018
The foreword of Microsoft's 2013 The Microsoft Carbon Fee:
Theory and Practice begins with the risk mitigation opportunity
available to insurers from sustainability initiatives.
“When it comes to mitigating risks associated with sustainability
issues, the importance of having robust corporate policies that
reflect a company's sustainability priorities cannot be
overstated,” said Mindy Lubber, president of sustainability
nonprofit Ceres. Written in the foreword of Microsoft's guide
summarizing its approach to building a simple carbon fee
model, the guide includes a five-step process to help
companies customize the model.
Five years after the publication was released, only one insurer
—Canada's Manulife—is readily visible in Ceres' investor
network list.
Perhaps carrier investments remain limited due to the slowly
evolving business impact of sustainability, or because of the
ongoing discussion and the evolving impact of climate change.
Given the raison d'etre of the insurance industry is risk, despite
sustainability's macroeconomics being hard to qualify and
quantify at a corporate business level, insurers need to take a
more active role.
Along with taking a top-down approach with organizations like
Ceres, insurers should also try bottom-up strategies using
emerging technologies to positively impact sustainability. Just
look at how many trees have been saved with the use of email,
the internet and pdfs.
The sustainability impact from new technologies has never
been more pronounced than it is today. Insurers need to take in, then break down, the gamut of these technologies into
actionable initiatives. From the basket of machine learning, artificial intelligence, virtual/augmented/mixed reality, the internet of
Given the raison d’etre of the insurance
industry is risk, despite sustainability’s
macro-economics being hard to qualify
and quantify at a corporate business
level, insurers need to take a more
active role.

2. things, conversational user interfacers and robotics are hundreds of risk mitigation opportunities.
Examples include using:
Machine learning and AI to identify energy transportation risk in wholesale (e.g., oil pipelines) and consumer (gas
delivery to residential) in physical delivery assets.
Virtual/augmented/mixed reality for ongoing safety and security training simulation, both physical and cyber.
Land, water and air-based robotics to more quickly analyze and respond to natural catastrophes, such as hurricanes, or
to man-made disasters such as terrorism.
Conversational UI interfaces, which let users interact with various applications in a natural way, to simplify human
interaction with all of these technologies.
A bottom-up approach for sustainability investments does not require a direct sustainability return on investment correlation. It
becomes an added benefit.
However, from the top down, U.S. insurers need to take a more active leadership role, minimally at the level seen in other
industry sectors. While across sectors, 65% of businesses hold senior executives responsible for sustainability performance,
the insurance sector sits at only 38%. Moreso, despite the critical financial impacts of a changing climate facing the insurance
sector, only 31% of insurers have formal board oversight for sustainability, according to Forbes.
Given the political dynamics arising from November's U.S. midterm elections, it's time for domestic carriers to not only get
involved but to also lead the way. Missing out on a market evolution like sustainability could jeopardize our environment and
insurers' investment returns.
Best’s Review columnist Gates Ouimette is founder and principal of ITconnecter. He can be reached at
gateso@itconnecter.com.
Back to Home
ADVERTISEMENT
Customer Service | Support | My Account | Contact | Careers | About Us | Site Map | Privacy Policy | Security |
Terms of Use | Legal & Licensing
Copyright © 2019 A.M. Best Company, Inc. and/or its affiliates ALL RIGHTS RESERVED.
Best’s Review (ISSN 1527-5914 print; 2161-282X online) is published monthly by A.M. Best Co. Inc.
Search this Site