Allianz and HSBC Insurance are partnering to provide clients with green reinstatement insurance. This kind of cover encourages builders to create more energy-efficient structures.
The rising trend of sustainability and green building insurance
It may surprise some to know that HSBC – the world's local bank with over 100 million customers – is also a major insurer, with more than 15 percent of its total profits in the first half of 2009 coming from both life & non-life insurance products. Under its bancassurance strategy for personal and business customers, HSBC distributes AGCS products in several countries.
The two global players also share an interest: sustainability is a priority for both companies and they are keen to ensure their products offer green and sustainable benefits to their customers wherever possible.
At HSBC green buildings insurance was identified as a valuable opportunity. "First generation" green insurance products consist of donating part of the premium to charity. "Second generation" green insurance products actually aim at embedding the green element in the product itself. The concept of green reinstatement is fairly easy to understand. If there is a loss, the insurer replaces the damage in a "greener" way than normal.
When HSBC Insurance decided to offer green products, the first step was to lead by example. This is how the idea of implementing green reinstatement within HSBC's own buildings insurance came about. The multi-regional program is underwritten by Allianz and covers several thousand offices, branches and data center worldwide from which HSBC operates.
Green building insurance and modern solutions
More advanced environmental standards
Sunny Sehgal of HSBC Insurance summarizes the benefits: "The new reinstatement clause allows HSBC to rebuild according to more advanced environmental standards than would have been possible otherwise (under the regular reinstatement) and so fits well with the environmental management system that HSBC operates across its corporate real estate. In monetary terms, the clause allows an additional five percent on top of the 'normal' insured loss amount, and incurs only minor additional premium."
Green reinstatement is enabled by the increasing use of government-approved environmental standards and green building codes, such as the United States' Leadership in Energy and Environmental Design (LEED) and the Building Research Establishment Environmental Assessment Methodology (BREEAM) in the UK. These codes are stricter than local minimum legal and planning requirements, so the insurer plays a vital role in encouraging green design.
Gavin Lillywhite, Account Manager at AGCS for HSBC on the multiregional program, comments: "There are two ways for insurance companies to increase sustainability: sustainable claims and pricing for sustainable behavior. The green reinstatement product combines these two areas and is an approach that we will continue pursuing in the future."
Green benefits for private homes
This initiative has directly led to the green reinstatement benefit being offered to HSBC's customers through several HSBC home insurance products around the world. In Hong Kong for example, where HSBC Insurance manufactures home & contents insurance, if a customer has an accident with a household appliance, such as a refrigerator, room-cooler, washing machine, dryer or water heater, they will receive a replacement with a green energy saving label at no additional cost.
Martin Brewer, Head of Strategic Partnerships & Green Insurance at HSBC, states: "We care passionately about the environment and know many of our customers feel the same way. So, for us it is important to develop and exchange best practices with our preferred partner Allianz and share the sustainability skills and expertise between the two market leaders. We are looking forward to continuing our successful collaboration and extending our green portfolio for the benefit of our customers."