Loss prevention work with our clients

Working closely together with our clients to prevent losses has always been an important part of If’s strategy. First and foremost, it should be noted that physical losses are not only costly for the insurance company.

Large losses can cause long disruptions to a company’s operations, as the attention shifts from fulfilling the business strategy to cleaning up and resurrecting the site and restoring operations. This process can often take months or sometimes even years. In addition, the company’s market share and their employees’ jobs are also at risk, which is why it is important that we work closely together with our clients to secure the best process for loss prevention.

Another important part of this equation concerns the environmental impact. This environmental impact has always been present, but it is only in more recent years that it has received the attention it deserves. Large losses will always have a significant impact on the local environment as well as contribute to increased carbon emissions. We often see the poisonous smoke and soot from a fire spreading with the wind and polluting the local environment.

We also see the chemical reactions in a fire will convert environmentally friendly building materials into hazardous waste, and the extinguishing water then collects these poisonous residues from the fire and creates local and regional pollution transported with the wastewater. Furthermore, carbon emissions are released into the atmosphere and contribute to global warming.

Any physical loss will have an impact on the environment, and as the largest insurer in the Nordics, we perceive it as a win-win mission to succeed with loss prevention procedures: our clients benefit from preventing losses and the environmental impact is reduced.

At If, we manage risks together with our clients and support them in loss prevention work, both when the claim occurs as well as in the rebuilding phase.

The lifespan of a building

When talking about sustainability, we often hear that we should reduce the number of materials, focus on recycling, and consider the lifespan of a product. How do we consider this in our work?

Anders Rørvik Ellingbø, Head of Property Risk Management Services in Norway explains; “Well, each building, machine, the goods and raw material has its own environmental life cycle. The equation begins already when extracting raw materials from nature such as the mining of metals, felling trees, excavating soil, and using fresh water. Raw materials are transported, which also has an impact. Raw materials are transformed into semi-finished products which again is transported and refined into finished goods for sale on the international markets.”

All buildings and machines insured by If have a predicted lifespan. As an example, the lifespan of a building can be anything from 20 years for the foil of the roofing, to decades or even hundreds of years for well-maintained heavy building constructions. In our work with our clients, we also focus on maintenance, which both reduces the risk of a claim from happening as well as reduces the risk of a negative impact on the environment.

Well maintained buildings and equipment typically also impact the general status of a factory and it will appear more orderly and cleaner as a result. Then again, the requirements and usability for buildings might change over time and require more frequent development.

Unpredictable risk scenarios

At If, we have seen many different risk scenarios which our clients can’t predict. A large fire, flood or even storms and hurricanes can disrupt the planned lifespan of buildings, machinery, and inventory. A total fire loss of a large production site will require most building materials and the interior to be demolished and replaced with new material, once again collected from our vulnerable natural resources, and transported, refined, and reconstructed to make new buildings. It will all have a carbon emission impact, as well as both a local and global environmental impact.

Using sustainable materials

One factor that is important to consider relates to the challenges of using different kinds of materials, for example materials with high and low CO2 emissions.

The whole life cycle of the materials must be taken into account. It starts from the collection of the raw material, and moves through the production process, the transportation of the material and the energy consumption when being erected.

The equation of the environmental impact is extremely complicated, and we also must consider the lifespan of the finished product, whether it is a machine or a building. If you can build a robust building lasting for 90 years, compared to materials with an expected lifespan of 30 years, you will “save” two demolitions and reconstructions, and that equals a significant CO2 emission saving.

We can also see that huge efforts are now being put into creating more environmentally friendly production methods when producing construction materials. This includes the increased recycling of steel, aluminium, and concrete, as well as an increase in the utilisation of green energy in both production processes and transportation.

Dilemmas when choosing materials

In terms of the challenges involved in choosing materials, one example is the renewable and so-called environmentally friendly material wood, used in construction. Trees are, of course, a renewable source of building material.

However, cutting down a younger pine tree or spruce tree, for example at 50 or 60 years, will have a CO2 impact. This tree could be collecting CO2 for many more years if left undisturbed. Furthermore, if a wood constructed building burns to the ground, we increase the consumption of trees as well as the amount of CO2 emissions, while the natural CO2 store is reduced.

Wooden material that has been affected by moisture over longer periods might also be exposed to rot and fungus, which means it must be replaced. During a large fire, the materials are extinguished by huge amounts of water, which becomes highly polluted by the waste material from the fire, and must also, due to this fact, be replaced. So called ‘dead materials’, such as steel or concrete, can more easily be restored after a large fire or flood.

Plastic insulation

Another example relates to plastic insulation, which by its nature, will contribute to an existing large fire with both energy and emissions, and not only CO2 emissions but also highly toxic materials. The insulation itself might reduce the thickness of the walls when erecting a building but will conversely create a larger environmental impact both locally and ultimately globally, when burning.

Most varieties of plastic insulation will start decomposing already at 50-130 degrees Celsius. Unprotected steel structures can lose half of their load bearing capacity at 500 degrees, while concrete and fire protected steel can often withstand the impact of a large fire. We consider many different aspects when having a dialogue with our clients about loss prevention work and the impact on the environment.

There can also be legislation to consider for different branches. When we look at the food and beverage industry, for example, there can be a request in some parts of the building for plastic insulation that fulfils hygiene standards.

There is no easy answer when choosing materials and we must support and reflect on the subject together with our clients to find the best possible solution. Therefore, we are very careful when recommending materials when clients are planning and constructing buildings.

Our success stories are often those where a large loss is either prevented from happening through adequate and sufficient barriers. Or where the extent of the loss is drastically reduced due to good loss reduction barriers.

The work of a risk engineer

Preventing losses through close cooperation with our clients has always been a part of our key strategy at If. For that reason, the work of the Risk Engineer has always been to prevent environmental impact by losses.

The most important task of the Risk Engineer is to work closely together with the client and through site visits map the risks of losses. Through our long and broad experience, the Risk Engineer will then suggest how to best prevent losses from occurring or if a loss should happen, how to minimise the consequences.

Secondly, we also provide guidance to our clients when requested in new projects, extensions or changes in their portfolio of buildings and facilities. This can be everything from where to locate the site with a focus on flooding, forest fire risk or other external exposures, to what kind of building materials are used, the fire separation walls or the inclusion of sprinkler systems.

Measuring the losses that do not happen is nearly impossible, but there are plenty of examples of the effect of a solid fire wall or a sprinkler system that controls the fire until the fire brigade can put it out or can even extinguish the fire itself.

We all gain from loss prevention

Our clients can continue their production within a short time without severe disruption to their market share or financial results, and their employees and management can concentrate on what they know best: creating value for their company and clients. To that end, the environment is saved from being unnecessarily exploited.

At If, we can then focus on creating value for our clients by doing even more loss prevention work. And in the best of worlds if we succeed in reducing losses across the whole portfolio, claims costs and premiums will be reduced.

Listen to our podcast

Listen to our podcast with Anders Rørvik Ellingbø, Head of Property Risk Management Services in Norway, about his views regarding sustainable loss prevention work.

Sustainable loss prevention work