How insurers can contribute to lower the CO2 footprint
Climate change and insurers’ contribution to ecological improvement were the dominant themes at the conference. However, according to Fridrik Thor Snorrason, CEO at Verna hf, many insurers are focused on lowering their own direct CO2 footprint and say little about how they can influence the CO2 footprint of their customers.
“One area where insurers can play a central role in lowering their customers’ CO2 emissions is through motor insurance, but private cars and light vehicles account for 15% of all CO2 emissions in Europe. Every time I look at the numbers for the potential impact of telematics motor insurance, I am just perplexed as to why the motor insurance industry hasn‘t switched completely to telematics-based products. The moral argument for telematics is very strong both in terms of the environment and increasing safety.”
Implementation of telematics and motivation for safe and environment-friendly driving behavior will reduce fuel consumption, road erosion, and slower vehicle wear and tear, which altogether contributes to lowering CO2 emissions. On the flip side though, if insurers implement telematics and lower CO2 emissions along with premiums, they may require a big amount of data that the clients prefer not to share. In Fridric’s opinion, it’s not an obstacle to using telematics in insurance. It’s just an incentive to implement it in a way that provides the customer with a “fair data deal” and a user-friendly solution.
Think about data in a radically new way
This was a message from Magdalena Ramada Sarasola, Insurtech Innovation Leader and Senior Director at WTW. During her keynote at Insurance Innovators, Magdalena offered the insurers to think about the sustainability of the latest trends from a business model perspective. For example, the Open Data approach implies that data is openly accessible and can be shared with different sectors. Although Open Data can help prioritize customer experience and generate more competitive premiums, insurance carriers are quite reluctant to put their data on public display, where competitors can see and use it. Another thing insurers care about is data decentralization in the context of Open Data. Below is Magdalena’s opinion in favor of OD usage:
“Open Data and Open Insurance have implications that go far beyond competitiveness and need to be discussed and governed so that we avoid underinsurance and discrimination, among many other risks. Open Data does not necessarily mean Decentralized Data and as an industry, we should be concerned about large non-insurance data-centralizing entities.”
Key takeaways
In general, insurance carriers who attended the Insurance Innovators event unanimously agreed on one thing – the future development of the entire industry is closely linked to technology. Without the tech component, insurers will not be able to provide the service that today’s customer expects.
- Customer journey and experience must be reinvented. It’s not enough to sell policies; rather, insurance providers must focus on a personalized approach to each customer, which is infeasible without technology.
- Insurers can contribute to ecological conditions improvement more than they think
- A new approach to data management is needed to tailor policies to individual needs through more efficient data manipulation.
We thank Rita for the industry development insights. Feel free to book a personal meeting with Rita to discuss the shift within the insurance sector or follow her on LinkedIn to stay updated on the burning insurance issues.