What makes a sustainable insurance company?

In their Global Risks Report 2020, the World Economic Forum identified that climate change had taken the top five positions as the greatest risks for companies in 2020. 

The report was published before the coronavirus COVID-19 outbreak, in fact ‘Pandemics’ has not been on the list since 2008, when it placed fifth in the “Top 5 Global Risks in Terms of Impact”.

Nonetheless, climate change continues to pose serious risks on business operations. Extreme weather, climate action failure, natural disasters, biodiversity loss and human-made environmental disasters were ranked as the top risks in terms of impact and likelihood. Insurance companies play an important role in supporting the transition to greener and cleaner ways of operating.  

Several ways of contributing

According to Philip Thörn, Head of Sustainability, If P&C Insurance, “there are several ways in which we can contribute. Our priority is to prevent damages from happening, for example through risk management services, private home assessments and other services. When damages do occur, we want to make sure they are handled in a sustainable way. We encourage and support our suppliers to use more sustainable methods and adhere to the Supplier Code of Conduct.”

If P&C Insurance supports its clients in reducing risk and environmental impact in their operations in various ways. As an example, Essity, a leading global hygiene and health company, has around 90 manufacturing facilities all over the globe, producing a wide range of hygiene and health related consumer products.

These sites, many of which feature heavy machinery operating with high pressures and temperatures, are exposed to different risks. Fires, machinery breakdowns and other types of incidents can all lead to property damage and costly business interruptions, including negative environmental impact.

‘Flammable materials such as dust, waste paper and nonwovens can accumulate around our machinery, posing fire hazards at the production floor.

Another concern is our raw material and finished goods storages where, in the event of fire, the risks of a fast spreading fire is high, especially when storing tissue paper, which is why we always install various types of fire protection such as sprinklers and fire walls and initiate other loss prevention measures wherever deemed necessary’, says Janina Helenius Bylander, Loss Prevention Director at Essity.

As an external provider of risk management service, If works closely together with Essity’s Loss Prevention team to monitor and mitigate risks such as these. Within the service agreement, If’s risk engineers perform annual assessments at the production facilities, resulting in a Risk Survey Report identifying and rating the risk profile at the specific site monitored, and a separate report with preventive and mitigating recommendations addressing the findings.

Equally important for If and Essity’s successful collaboration within loss prevention, however, has been the ongoing dialogue and informational exchange between the risk engineers, the managers and workers on-site and the Loss Prevention team at Essity, according to Ola Nilsson, Vice President of Risk Management and Insurance.

When accidents happen

At If, when accidents happen, we do our best to make sure the claims are handled in a sustainable way. Philip Thörn explains, “In 2019, we developed a Supplier Code of Conduct, which defines the minimum requirements that If asks from our suppliers to respect when conducting business with us.

Annually, in the Nordic region, we procure goods and services for more than 15 billion Swedish Kroner. Of this amount, 14 billion SEK is related to claims handling. Our suppliers in Claims and Group Services have to comply with the Code, including requirements set for human rights, labour rights, environment and anti-corruption. In addition to the requirements in the Code, we also have sector specific environmental requirements for vehicle and property repair contractors.”

One partner is If’s car glass glazier specialist in Sweden, Ryds Bilglas. The company handles around 60,000 car glass claims on behalf of If’s Nordic customers every year, the mechanics today first seek to repair the damaged areas of the windshields, instead of discarding and replacing them – something that was much rarer only 20 years ago.

Apart from the economic benefits and the time saving aspects of repairing instead of replacing – the method also has considerable environmental merits. According to calculations made by Ryds Bilglas, the repairs that were made during 2019 alone would have resulted in over a thousand tonnes of carbon dioxide emissions, if the windshields had been replaced instead.

‘The manufacturing of new windshields, transport to and from the wholesaler, and to and from the workshop, waste handling and a mounting process with more chemicals involved – repairing means there are a lot of heavy processes we can avoid’, Zandra Kastell, account manager at Ryds Bilglas says.

cargo container ship
Photo credit: d3sign

The time to act is upon us

According to Morten Thorsrud, President and CEO, If P&C Insurance Holding Ltd, “In the insurance industry, where we can already see the frequency and magnitude of natural catastrophes increasing, we consider the recognition of climate change as an issue of global importance, which requires urgent attention from us all. If is committed to promoting sustainability, as we know it is central to the company and its stakeholders.

Insurance is a vital part of a well-functioning and evolving society and we believe our knowledge, products and services can support the transformation to a more sustainable society.”

As an example, on the investment side, If is actively working on integrating Environmental, Social and Governance (ESG) factors into our investment policies. For example, If will start to implement norm-based research, i.e. research which assists investors in making decisions regarding companies’ adherence to international norms on environmental protection, human rights, labour standards and anti-corruption.

As Philip concludes, “In 2020, we will continue to incorporate ESG issues into our products, services and business operations. We look forward to further develop our sustainability work in close cooperation with our customers, employees and suppliers.

Article by: Kristian Orispää

Contributor: Philip Thörn