With the effects of climate change now at the forefront of public consciousness due to growing natural disaster losses, the risk and insurance industries are working to make growth more sustainable, and companies have made significant investments in this area.
In a recent podcast from RIMS, Alicia Pavelko (pictured above), Zurich North America’s leader in construction innovation and sustainability spoke about building resilience to forces that threaten long-term sustainability without abandoning industry and economic growth.
According to Pavelko, sustainability and development are not mutually exclusive, in fact they are interdependent, as maintaining environmental quality is necessary for sustainable development.
“The link between climate change and sustainable development stems from the fact that climate change can be a barrier to growth, and sustainable development is key to reducing risks and increasing our capacity to adapt to future challenges,” Pavelko said. “So, when I think about it more, sustainable growth means growth that meets our needs today, without compromising the ability of future generations to meet their own needs. This is where the insurance industry can bring products and services to the table together with our customers and distributors.
Pavelko said the Zurich-based construction business has launched two new products with sustainability in mind. Last year, the insurer offered builders up to US$50 million in risk capacity for projects using mass timber, higher than offered elsewhere in the market, Pavelko said. This will enable Zurich’s customers to carry out commercial-scale projects using this sustainable material.
Mass timber is a type of engineered building material made by pressing layers of wood together, often with a strong adhesive and high pressure. According to Pavelko, producing this material emits less carbon than producing steel or concrete. It is lightweight, which reduces the amount of steel and concrete needed to build the foundation. It is a renewable resource and has excellent carbon storage properties.
“When [mass timber] “Offering some attractive and timely advantages over traditional building materials, the insurance market considers this product similar to a highly flammable light wood frame,” Pavelko said. Prohibition. We are happy to promote its use and provide the necessary capacity at qualified risks.
The second product is weather benchmark insurance, which covers weather events that are frequent and severe. Coverage includes five perils: rain, wind, heat, cold and snow.
“These weather events raise the risk of construction delays that are not covered by traditional builder’s risk insurance policies, whose coverage is triggered by actual physical loss or damage to the project,” Pavelko said. “Zurich’s construction weather parameter policy, on the other hand, does not require physical loss or damage. Instead, the claim fee is paid based on a pre-determined weather event.
Another important aspect of sustainability is how energy is generated and used, and the scale of this issue has been further exposed by the war between Russia and Ukraine.
“A key lesson to come out of that conflict is that the world needs to diversify our energy sources and sources — now,” Pavelko said. “One of the most promising findings is growing interest in alternative forms of wind power generation. In June of this year, the Biden administration announced a federal-state partnership with 11 East Coast states to expand and accelerate offshore wind energy production. In August, President Biden’s 2022 inflation Signed the Reduction Act.
According to Pavelko, the deflation law includes new and revised tax incentives for clean energy, and it calls for a $10 billion investment in new facilities to manufacture electric vehicles, wind turbines and solar panels.
The risk and insurance industries play a major role in building sustainability due to their large amount of data and knowledge.
“Commitment to collaboration is key,” Pavelko said. “When you boil it down, we all have a vested interest in the success of these projects and their positive impact on our planet. We need to enable our clients and contractors to develop these new technologies. This may mean sharing loss and experience data, or we can all do our part to support the transition to net zero. To ensure that we do, global best practices across a wide range of industries work. I think more and more people are recognizing that insurance providers have an important role to play here, and we have a wealth of insights born from decades of experience across multiple industries and geographies.