Energy-Efficiency Options for Insurance Loss Prevention

Evan Mills, Ph.D.
Center for Building Science
Environmental Energy Technologies Division
Ernest Orlando Lawrence Berkeley National Laboratory
University of California
1 Cyclotron Rd, Berkeley, California, USA

Ivo Knoepfel, Ph.D.
Climate Change Advisor
Swiss Reinsurance Company
Zurich, Switzerland

June 9, 1997

This report expands on a version presented at the ECEEE Summer Study, Prague, June 1997

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Synopsis

Energy-efficiency improvements offer the insurance industry two areas of opportunity: reducing ordinary claims and avoiding greenhouse-gas emissions that could precipitate natural disaster losses resulting from global climate change. We present three vehicles for taking advantage of this opportunity, including research and development, in-house energy management, and provision of key information to insurance customers and risk managers. The complementary role for renewable energy systems is also introduced.

Abstract

This report argues that the insurance industry should support efforts to identify, improve and implement "no-regrets" energy options that would both reduce near-term business risks caused by insured losses while making a considerable contribution to long-term reductions in greenhouse-gas emissions that also threaten their bottom line. The short-term risk-reducing benefits would have distinct value to insurance companies and their customers irrespective of the timing or extent of future damages related to global climate change. Our central recommendation is that the international insurance industry initiate a systematic activity to (a) identify technologies that contribute both to traditional loss-prevention and to reducing greenhouse-gas emissions, (b) promote the dissemination of information and the utilization of such technologies in the cases where they have proven to contribute to loss prevention and are commercially available, (c) "lead by example" by implementing in-house energy management programs in their own building stock, and (d) support research, development, and commercialization where promising technologies are not yet available in the marketplace. Once the loss-prevention benefits are sufficiently demonstrated, insurers can promote the use of the corresponding technologies and strategies by introducing risk-adjusted insurance premium schemes.

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