Best's Review




Insurers must recognize the financial impact and benefit of investing in sustainable technology.
  • Gates Ouimette
  • December 2018
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Gates Ouimette

Gates Ouimette

Given the raison d’etre of the insurance industry is risk, despite sustainability’s macro-economics being hard to qualify and quantify at a corporate business level, insurers need to take a more active role.

The foreword of Microsoft's 2013 The Microsoft Carbon Fee: Theory and Practice begins with the risk mitigation opportunity available to insurers from sustainability initiatives.

“When it comes to mitigating risks associated with sustainability issues, the importance of having robust corporate policies that reflect a company's sustainability priorities cannot be overstated,” said Mindy Lubber, president of sustainability nonprofit Ceres. Written in the foreword of Microsoft's guide summarizing its approach to building a simple carbon fee model, the guide includes a five-step process to help companies customize the model.

Five years after the publication was released, only one insurer—Canada's Manulife—is readily visible in Ceres' investor network list.

Perhaps carrier investments remain limited due to the slowly evolving business impact of sustainability, or because of the ongoing discussion and the evolving impact of climate change. Given the raison d'etre of the insurance industry is risk, despite sustainability's macroeconomics being hard to qualify and quantify at a corporate business level, insurers need to take a more active role.

Along with taking a top-down approach with organizations like Ceres, insurers should also try bottom-up strategies using emerging technologies to positively impact sustainability. Just look at how many trees have been saved with the use of email, the internet and pdfs.

The sustainability impact from new technologies has never been more pronounced than it is today. Insurers need to take in, then break down, the gamut of these technologies into actionable initiatives. From the basket of machine learning, artificial intelligence, virtual/augmented/mixed reality, the internet of things, conversational user interfacers and robotics are hundreds of risk mitigation opportunities.

Examples include using:

  •  Machine learning and AI to identify energy transportation risk in wholesale (e.g., oil pipelines) and consumer (gas delivery to residential) in physical delivery assets.
  • Virtual/augmented/mixed reality for ongoing safety and security training simulation, both physical and cyber.
  • Land, water and air-based robotics to more quickly analyze and respond to natural catastrophes, such as hurricanes, or to man-made disasters such as terrorism.
  • Conversational UI interfaces, which let users interact with various applications in a natural way, to simplify human interaction with all of these technologies.

A bottom-up approach for sustainability investments does not require a direct sustainability return on investment correlation. It becomes an added benefit.

However, from the top down, U.S. insurers need to take a more active leadership role, minimally at the level seen in other industry sectors. While across sectors, 65% of businesses hold senior executives responsible for sustainability performance, the insurance sector sits at only 38%. Moreso, despite the critical financial impacts of a changing climate facing the insurance sector, only 31% of insurers have formal board oversight for sustainability, according to Forbes.

Given the political dynamics arising from November's U.S. midterm elections, it's time for domestic carriers to not only get involved but to also lead the way. Missing out on a market evolution like sustainability could jeopardize our environment and insurers' investment returns.


Best’s Review columnist Gates Ouimette is founder and principal of ITconnecter. He can be reached at

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