Sustainable claims: Oliver Wyman’s Rob Bailey on reducing emissions in the claims process

According to Bailey, claims emissions should be a high priority for insurers because:

• An Oliver Wyman study found claims-associated emissions to be an order of magnitude higher than operational emissions. 
• Claims restorations often involve carbon-intensive materials (e.g. steel, cement, glass).
• Sustainability impacts can be significant when the entire claims supply chain is considered.
• Claims are a tangible, real-world opportunity to engage with clients on sustainability. 
• Claims emissions should be considered as scope 3 emissions for an insurer, and therefore will need to be disclosed under various reporting directives. 

Challenges to overcome include: 

• Claims supply chains are complex, involving multiple supply chains and networks (e.g. supplier networks, contractors, lawyers, body shops, etc.
• Emissions data is patchy and inconsistent.
• Currently no standard methodology for measuring claims emissions.
• Balancing sustainable choices/emissions reduction with customer satisfaction, claims costs and combined ratios.

Actions insurers can take to reduce emissions: 

• Develop a methodology for measuring emissions in the complex claims supply chain (in the absence of an industry standard at this point).
• Map the claims supply chain.
• Engage with suppliers/contractors to understand their supply chains. 
• Identify emissions hotspots within the supply chain (and target emission reduction efforts in these areas).
• Use the claims process to nudge insureds towards more sustainable choices (e.g. EV courtesy cars, home insulation, green retrofitting, low carbon heating). 
• Leverage ecosystem relationships to provide these things or steer insureds towards them. 
• Build ‘repair over replace’ and circularity into claim restoration.
• Use a robust scope 3 emissions calculator/model to understand emissions embedded in specific materials & processes, etc. 
• Improve data capture from suppliers over time. 
• Collaborate with ecosystem partners.