How to Innovate Like an Insurance Carrier

By: Katherine Wood

Insurance providers aren’t particularly well known for their fast-paced innovation. In truth however, the insurance industry is on the cutting edge of corporate environmental awareness and has been for some time. Insurance providers also manage their innovations: They introduce new ideas but don’t adopt them at a faster pace than they can support.

The insurance industry’s stance on environmental issues is far from selfless. Many scientists believe that climate change strengthens the force of natural disasters, causing serious increases in insured losses and bad news for policy providers. So there are financial reasons that some carriers lead the way in corporate environmental responsibility.

• Innovate to protect: The United States has dealt with a series of increasingly intense and destructive storms over the last several years. In 2012, Americans suffered $57.9 billion in insured property losses, more than $30 billion greater than the average annual loss for the years 2000 through 2011. Many insurance carriers understand the need to protect themselves from major losses caused by both more severe storms and over development in at-risk areas. Accordingly, the insurance industry on balance has taken a strong stance on cutting environmental waste and reducing greenhouse gas emissions.
• Don’t let politics block progress: Many industries hesitate to engage in environmental awareness efforts because of the polarizing politics involved with climate change and global warming. Members of the insurance industry, while not acting as one, have in large measure set an example of reducing greenhouse gas emissions and following those standards rigorously, regardless of political opinion.
• Remain mindful of smaller-scale ideas: Some insurance carriers haven’t simply endorsed large scale reductions in greenhouse gasses and environmentally harmful products. They also attempt to induce change at the individual level with benefits for those who live greener. Those providers combat climate change from all sides by providing green incentives to both homeowners and drivers.
  • Homeowners: Multiple providers offer better rates or even discounts for new homes built with green materials and features, which also typically last longer and resist storm damage better than their non-green counterparts. Additionally, others offer policies that allow homeowners to rebuild using green materials after a covered loss.
  • Drivers: Many insurance providers have instituted pay-as-you-drive programs that allow drivers to tailor premiums to how much—or how little—they drive. Some carriers also offer discounts for people who buy hybrid or electric vehicles.
• Innovation starts from within: To influence others, a company must first apply better environmental practices to itself. The insurance industry as a whole has set an example by adopting low emissions practices and engaging in reforestation efforts to offset further emissions. Insurance carriers also have adopted paperless billing techniques and developed digital forms of identification. The industry currently works to pass legislation that allows the use of such digital ID forms over paper cards. In fact, as of June 2013, 23 states accept the use of electronic proof of insurance– also known as e-cards – for vehicle registration and during stops by an officer. In three additional states, lawmakers had passed bills that awaited the governor’s signature.
• Work for greater interests than your own: Some insurance carriers exhibit an even greater sense of global environmental responsibility by helping to protect developing countries from natural disasters. Visibly combating natural disasters across the globe helps to raise awareness for environmental causes and to incite others to action.

Sometimes innovation doesn’t come in the form of ground breaking technology, research, or restructuring. It can take the form of quiet activism that benefits both an industry and the world. For years, the insurance industry has led the way – though sometimes its efforts have flown under the radar. Other businesses can learn a lot from an industry that some consider stodgy and conservative.

By Katherine Wood

Photo: Conceptual recycling sign with images of nature from shutterstock.com