How the Insurance Sector can Integrate Sustainable Practices
Sustainability has emerged as a pivotal concern across numerous industries, including insurance. Dr. Quinton Goddard, Head of Sustainability at Squaretrade, provides valuable insights on how the insurance sector can integrate sustainability practices, and using innovations to achieve notable environmental and social impacts.
Sustainability in the insurance industry encompasses a broad spectrum of considerations. The relevance of the United Nations' Sustainable Development Goals (SDGs) varies based on an insurer's product offerings and geographical reach - the goals serve as a framework to guide insurers in addressing complex sustainability challenges.
"Insurers need to think about sustainability holistically, considering its impact across all aspects of their business. Internally, this means adopting sustainable practices within operations, such as reducing carbon footprints and improving energy efficiency," says Dr Goddard.
"For their investment portfolios, insurers should prioritise responsible investments that support environmental sustainability, social equity, and strong governance practices. Externally, in terms of claims servicing, insurers increasingly need to promote sustainability by encouraging and facilitating services that are environmentally friendly and resource efficient," he continues.
Developing innovative insurance products that promote sustainable practices, alongside providing incentives for customers who engage in sustainable behaviours, is essential for fostering a more sustainable future.
Q. How can insurtech innovations contribute to sustainability in the insurance industry?
"Insurtech firms have the potential to significantly advance sustainability goals by enhancing the targeting and pricing of insurance products, thereby reducing waste and inefficiency, particularly in traditional insurance sectors where innovation has lagged." says Dr Goddard.
"By leveraging innovations across applications including data analytics and machine learning, insurtech players today can more accurately assess risks, tailor products to individual needs and optimise resource use.
"Another area where insurtech can quickly make impact is through innovative products that focus on prevention, for instance health insurance which offers customers nudges to improve their health preventing future illness, or motor insurance that incentivises safer driving."
Such preventive measures not only decrease claims and associated expenses but also advance broader societal objectives, including enhanced public health and road safety.
Q. What are the primary sustainability goals your company is trying to achieve?
"As an insurer of mobile phones and consumer electronics, we recognise our role in facilitating the transition to a circular economy. We know that while consumers are eager to make more sustainable choices, they often lack the necessary information and resources to do so.
"Our unique position enables us to guide consumers toward these choices, extending the lifetime of their devices and ensuring that when they are no longer needed, they are repaired, refurbished, or recycled responsibly."
Q. What are the more difficult goals and what is the hardest thing about overcoming them?
"Transitioning to a circular economy model is a complex challenge that the insurance industry cannot tackle alone; it requires collaboration among all industry stakeholders, including regulators," says Dr Goddard.
"Positive strides have already been made by regulators regarding the Right to Repair and eco-design of products, but there is still much work to be done. Manufacturers need to accelerate their efforts to enhance the repairability of their products and embrace the use of non-OEM parts in repairs. While insurers can develop the right products to support this transition, effective claims servicing in a circular economy requires seamless cooperation among manufacturers, repairers, and recycling firms."
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