In a recent interview with Insurance Business, Material Cultures director Paloma Gormley threw down the gauntlet to the insurance industry, highlighting the responsibility of the sector to bridge the sustainability gap created by modern construction methods and materials.
“We completely agree with Material Cultures’ assertion that the insurance industry has an important role to play in supporting the transition to more environmentally friendly construction materials,” said Sophie Hitchcock (pictured left), interim head of construction, at Aviva. “The built environment contributes 40% of the UK’s carbon emissions, which is why this is a priority area for Aviva.
“We believe that risk management and property resilience needs to be an integral part of the process from the design, through the development and construction phases and during the lifetime of its use. Where new and innovative materials are being considered, these should undergo rigorous testing to ensure the material properties are fully understood.”
For Michael Gregory (pictured centre), underwriting strategy director at RSA, and one of the key architects of the insurer’s low carbon underwriting policy, taking an inclusionary approach to supporting stakeholders is critical.
“When it comes to sustainable buildings, such as Mass Timber Construction, we need to be cautious and deliberate in how we assess these risks,” he said. “Therefore, we assess each and every risk on its own merits with full underwriting information requested and considered.”
Alastair Thomson (pictured right), head of expert property claims at Zurich, noted that, like a lot of organisations, insurance companies have spent the last few years ensuring that they are on track to deliver their own environmental targets such as electric vehicle fleets or carbon-efficient offices. However, he said, the time has now come to think about how the products insurers sell can help deliver wider environmental benefit to others.
“[That includes] giving more thought to whether or not an insurance claim can actually become part of a longer-term environmental solution,” he said. “The traditional solution to a property insurance loss is to put the building back in the same condition it was before the loss. This does present us with an opportunity for us to think differently, both in terms of the reinstatement of the building and the footprint of the building for years to come.”
Hitchcock highlighted how Aviva has expanded its underwriting appetite to include engineered timber in commercial developments.
“Of course, this is about more than just shifting from concrete to sustainable timber,” she said. “We need to help communities get ready for the future, ensuring that buildings are built to last, rather than those that need to be replaced within a few years. The full picture includes considering carbon footprints over the total lifetime use of a building, with all the negative carbon impact that destruction and replacing involve.
“It needs to start at the initial concept of a project, through design and construction, to the way that those spaces will be used by the people calling them home, or the office.”
Thomson emphasised that sustainable construction can come in many different forms - construction materials, solar panels, green walls, blue roofs and heat pumps are all great examples of larger-scale initiatives. However, there are also many small changes that can make positive bio-diversity impacts such as bee bricks, wildlife ponds or even a bug hotel.
“These are genuinely exciting times and we have a real chance to do things differently,” he said.
Regulation and standardisation is crucial in how the insurance sector can respond to coverage requests, Gregory said. He noted that for large risks, it often requires multiple insurers and reinsurers to provide capacity - therefore, the importance of standardisation and appropriate regulation of constructors and suppliers can not be underestimated. It would be unlikely for an abundance of insurance capacity to appear without strong developments being made in those areas.
RSA, he said, looks to have its risk engineering and underwriting specialists involved as early as possible to help enable innovation and to give RSA the best risk information and data to allow it to underwrite appropriately.
“The more data and research the better, and where our clients, or prospective clients, are using these alternative materials, we can actively guide them so that they can reduce, manage or mitigate risks in the design rather than telling them they need to do this retrospectively,” he said.
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