Decarbonizing claims is a strategic priority
Materials and energy used to fulfill insurance claims account for emissions equivalent to the combined annual outputs of France and the UK. This significant environmental impact has now become a strategic focus for the boards and C-suites of insurance companies.
Holistic Approach
We at Claims Carbon have been advocating a holistic approach to this topic where insurers can nudge, push and help the following stakeholder groups:
Customers at the point of insurance policy sales
Claimants at the incident occurrence
Suppliers at the repair stage
Other insurers managing claims on your behalf
Traditionally, insurers have focused on steering suppliers towards sustainable practices, a vital first step. Yet, evolving regulatory standards necessitate broader strategies.
McKinsey's report also takes the broader approach by recognizing that insurers are in a very special position as they also have the opportunity to make impact long before the claim has occurred. The impact can be increased by clever considerations at the point of sales and underwriting of the insurance. This is what McKinsey writes about this:
“Embed emission reduction at the product level. Specifically, insurers could redesign policies to enable sustainable claims handling and encourage repairs using lower-emission options. New policies could promote alternatives such as certified green repair shops or repairs over total loss where appropriate. Incentives and nudges toward safer and more sustainable behaviors could also help manage claims frequency.”
Decarbonizing the Value Chain
A significant portion of emissions in the claims process originates from supplier activities, notably during repairs and replacements. Effective management of these suppliers is vital for insurers aiming to achieve substantial emissions reductions. Additionally, fostering the recovery and reuse of high-emission materials such as aluminum in total loss scenarios, and creating a robust supply chain for recycled parts, are critical steps that can lower the overall environmental footprint.
Optimizing the Claims Process
Claims handlers play a pivotal role in reducing emissions throughout the claims lifecycle. By prioritizing digital over on-site inspections, recommending repairs rather than replacements for minor damages, and optimizing tow routes to minimize travel distances, significant emissions reductions can be achieved while maintaining high standards of customer service.
Claims Carbon continues to develop innovative tools and solutions to help insurers decarbonize claims. Reach out to learn more about the steps insurers need to take to expand their decarbonization efforts in P&C claims.
