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. 11/10/21, 1:51 PM Sustainability
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AM BEST'S MONTHLY INSURANCE MAGAZINE
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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.
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,
“

2. 11/10/21, 1:51 PM Sustainability
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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 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.
insurers need to
take a more active
role.
”
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