Evan Mills
MS/90-4000, Lawrence Berkeley Laboratory
Berkeley, California, USA, 94720"
LBNL Report No. 43642
November 2001
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The insurance industry is typically considered to have little concern about energy issues. However, the historical involvement by insurers and allied industries in the development and deployment of familiar loss-prevention technologies such as automobile air bags, fire prevention/suppression systems, and anti-theft devices, shows that this industry has a tradition of utilizing technology to improve safety and otherwise reduce the likelihood of losses for which they would otherwise have to pay. Through an examination of the connection between risk management and energy efficiency, we have identified nearly 80 examples of energy-efficient and renewable energy technologies that offer “loss-prevention” benefits, and have mapped these opportunities onto the appropriate segments of the very diverse insurance sector (life, health, property, liability, business interruption, etc.). Some insurers and risk managers are beginning to recognize these previously un-noticed benefits. This paper presents the business case for insurer involvement in energy efficiency and documents case studies of insurer efforts along these lines. We review steps taken by 52 forward-looking insurers and reinsurers, 5 brokers, and 7 insurance organizations, and 13 non-insurance organizations in the energy-efficiency arena. The approaches can be grouped into the categories of: information, education, and demonstration; financial incentives; specialized policies and products; direct investment to promote energy efficiency and renewables; value-added customer services and inspections; efficient codes, standards, and policies; research and development; and in-house energy management in insurer-owned properties. Specific examples include reduced premiums for architects and engineers who practice building commissioning (reduces risk of property loss and liability-related claims), insurer promotion of improved indoor air quality practices (mitigating life, health, and liability risks), and insurer promotion of energy-efficient torchiere light fixtures (eliminates a significant fire hazard). Despite the impressive numbers of firms that have made forays into the sustainable energy arena, few of these activities are promoted at a high-level and there remain a variety of technical and market barriers that insurers and their partners must surmount.