In a recent speech to UK risk managers at the Association of Insurance and Risk Manager’s (AIRMIC) conference in Bournemouth, Andrew Tunnicliffe, COO of Aon Global Risk Consulting, called upon the insurance industry to rethink its role in promoting good corporate citizenship by creating “influential insurance” products at reduced premiums or with green policy terms.
He pointed out that, according to a survey by Aon, some 82 percent of risk managers believe the insurance industry needs to change its attitude to corporate social responsibility (CSR).
He urged insurers and brokers to think seriously about green product development to bring about positive consequences, asking the rhetorical question – “can the transfer of risk actually promote reckless behavior?”
Tunnicliffe said Green insurance products could include:
— Premium reward and coverage enhancement for hybrid cars or buildings constructed to be more robust against extreme weather events;
— Pollution legal liability and remediation cover;
— Specialist insurance for renewable energy projects; and
— Health insurance products with “it pays to be healthy” reward systems.
He added that risk management must complement insurance products to support organizations’ CSR efforts. A survey conducted by Aon in 2008 revealed that 76 percent of companies only had a limited view of their suppliers’ supply chain, leaving them exposed to reputational risks should the supplier turn out to be less than an ideal corporate citizen. Risk managers must request that their supply chain conforms to the CSR standards to which they prescribe.
“We cannot have ‘organically grown’ insurance policies or ‘carbon neutral premiums’ but the insurance industry has the power to influence and create a greener society. Some 97 percent of risk managers say their organization is committed to becoming socially responsible while 71 percent recognize how this would have a material impact on shareholder value,” Tunnicliffe added.
“As such, embedding CSR principles at the beginning of insurance product development has to become part of the way we work to support global businesses. Looking at where we can reduce premiums to encourage green technology or renewable power generation are just some examples of how we can implement CSR as part of our businesses.”
Source: Aon – www.aon.com
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