Technologies that Reduce the Likelihood of Insured Losses While Increasing Energy Efficiency

Table 1. Potential for energy-efficient technologies to prevent insured losses.

Insured Risk Mitigated
Energy Efficiency Measure	Fire & Wind Damage	Ice & Water Damage	Extreme Temperature Episodes	Power Failures	Professional Liability	Uninsured Drivers	Health & Safety (Lighting)	Health & Safety (Indoor Air)
Air Vest for spray booths								*
Building commissioning	*	*			*		*	*
Central heating controls								*
Compact fluorescent lamps							*
Daylighting				*			*
Demand-controlled ventilation				*				*
Economizer cooling					*			*
Efficient appliances	*			*	*			*
Efficient duct systems	*	*			*			*
Efficient windows	*	*
Electronic lighting ballasts	*						*
Energy audits & diagnostics					*		*	*
Extra interior gypsum board	*
Heat-recovery ventilation		*						*
Insulated water pipes		*	*
LED exit signs				*			*
Light-colored roofs	*		*	*				*
Measurement & Verification	*	*			*		*	*
Natural ventilation				*				*
Pay-As-You-Drive insurance						*
Radiant barriers	*
Radiant hydronic cooling				*				*
Radon-resistant housing								*
Reduce indoor poll. sources					*			*
Roof/attic insulation		*	*
Sealed-combustion appliances	*				*			*
Torchier light fixture with CFL	*

Some benefits result from a single strategy targeting a specific end use, while others result from a host of measures, such as energy-efficiency improvements that have the side benefit of reducing electromagnetic fields (EMF) that are proportional to total current. (EMF-related claims are a growing concern for insurance companies.[18] ) Similarly, comprehensive strategies, such as uniform protocols for measurement and verification of energy savings and proper equipment performance, apply to a wide range of efficiency options.

The list presented below is not intended to be comprehensive, and the risk reductions described here are not well quantified in some cases. More in-depth study is needed. Care should be taken that new measures do not inadvertently introduce new sources of loss. In addition, it is important to note that the insurance industry has many sub-sectors: automobile, personal liability, etc., and not all measures described below are relevant to all sectors.

Reducing Fire & Wind Damage

• Install energy-efficient windows. During a fire, heat-stressed windows can shatter as a result of differential expansion near the frames (the edges are cooler than the center of the window), and the increased supply of air through the broken window accelerates the spread of fire. Efficient windows (e.g., those with double glazing or low-emissivity coatings) may reduce the likelihood that fire will break the window. Proposed modifications to traditional low-emissivity coatings would make windows considerably more fire-resistant.[19] Multi-glazed windows also serve as a deterrent to burglars.
• Install energy-efficient window retrofit films. Energy-saving plastic window retrofit films may offer safety benefits during earthquakes and hurricanes by holding shards of broken glass together and maintaining a barrier against blowing wind and rain.
• Install foil-based radiant barriers in walls and attics. These barriers reduce air-conditioning energy requirements in hot climates and may also reflect radiation from fires, slowing their spread.
• Install multiple layers of gypsum board in homes. These layers provide"thermal mass", which can drastically reduce air conditioning energy use and significantly raise a wall's fire rating.[20]
• Install energy-efficient appliances. Residential appliances, especially those that are old and in disrepair, can cause fires. Problems range from burned-out pilot lights (resulting in explosive build-up of natural gas) to"flame roll-out" from fuel-fired water heaters or furnaces caused by pressure differentials from improperly designed mechanical ventilation and fireplaces in the home. Energy-efficient appliances are on for a smaller percentage of time than other models and may therefore be less likely to cause this type of fire. In the U.S., mandatory energy efficiency standards have banned pilot lights and replaced them with electronic ignition in some types of appliances.[21]
• Develop a torchier light fixture that uses compact fluorescent lamps. Typical torchiers (tall floor lamps that throw light onto the ceiling) use very high-wattage incandescent lamps that can cause fires if the lamp falls over. Recent tests have shown that the light levels can be matched with compact fluorescent lamps with as little as one-twelfth as much power demand.[22]
• Use light-colored building and road materials and plant urban trees. Large cities are typically several degrees warmer than their surroundings because of the"urban heat island effect" . This results in more urban smog (and associated health costs) and increased air conditioning energy use. Research has demonstrated that lightening the color of roads and buildings, and planting urban trees can dramatically reduce average urban temperatures;[23] detailed field studies have shown as much as 40-60% air conditioning savings in a series of buildings where these strategies were used.[24] Lightened (or aluminized) exterior surfaces can also make a building less vulnerable to fire, especially if the materials are"tuned" to reject near-infrared radiation. An analysis of optimized paints found a potential 3.5-fold improvement in the"fire reflectance" of paints compared to typical white paint.[25] The use of trees to lower temperatures around buildings has also been found to have the side benefit of reducing the rate of water flow onto streets during downpours, and thus local flooding.[26]

Reducing Ice & Water Damage

• Insulate water pipes. Uninsulated pipes can freeze and break, causing water-damage losses. According to the Disaster Recovery Business Alliance, the U.S. insurance industry paid $4.5 billion in claims during a 10-year period for freezing pipes in 17 southeastern states (a region not normally expected to have significant freezes). Pipe insulation is a simple energy retrofit that saves energy and reduces the likelihood of freeze damage.[27]
• Weatherize to prevent"ice dams." Ice dams are rooftop ice build-ups that result from repeated melting and refreezing of snow. Melting water collects behind the ice dams, damaging the roof. A single large blizzard in the U.S. in early 1996 was estimated to have resulted in 10,000-15,000 such water damage claims, with an average cost of $2,000 per home.[28] Ice dams form because of preventable"thermal short-circuits" caused by air leakage and insufficient insulation levels. Adding to the energy cost are electric heating elements often installed along rooflines, intended to melt the ice.
• Install energy-efficient windows. Inefficient windows condense water on their interior surfaces. The moisture can cause serious deterioration of window frames and casements. It is not clear whether this could result in an insured loss (for the owner, designer, contractor, or manufacturer).

Reducing Damage from Power Interruptions & Extreme Temperature Events

• Increase end-use electricity efficiency. Interruption in energy-related services often leads to insured losses, such as business interruptions and damage to perishable food products. Current renewable or fossil-based backup power-generation systems could be downsized considerably (and run longer) if the energy loads they serve are highly efficient. For example, energy-efficient refrigeration systems can maintain cold temperatures for a longer time during power interruptions.
• Install energy-efficient insulation, light roofing materials, and ventilation. Power interruptions often occur during extreme temperature episodes. Superinsulated houses stay warm longer during cold-weather power outages. Homes with efficient windows and light-colored roof materials stay cool longer during warm-weather power interruptions. Hundreds of recent"heat deaths" (which result in health and life insurance costs) during peak summertime temperatures in the U.S. often occurred on the top floors of multifamily buildings where residents are exposed to intense heat gains through uninsulated roofs and brick walls that accumulate heat and then radiate it inwards (Figure 3). Figure 4 shows how a package of measures including attic insulation, white paint on the roof, and ventilation would bring the indoor air temperature in such an apartment down by over 10ÁF on a hot day. Global climate change could increase the frequency and severity of extreme-heat episodes. Ultra-cold weather events of course also pose a risk to occupants of poorly insulated buildings, and can also be mitigated by energy-efficiency measures.

Figure 3. The bars indicate numbers of deaths each of the July 1995 heat wave in Chicago, and the curve shows the heat index, which reflects the combined effect of temperature and humidity.[29]

Figure 4. Computer-simulated indoor temperatures in the top floor of a prototypical 1940s two-story apartment building in Chicago during the July 1995 heatwave. In the existing building, top-floor temperatures reached 108ÁF and remained high even after the outdoor temperatures had started to drop. The addition of attic insulation, white paint on the roof, and a ventilation system brought top floor temperatures in line with outdoor temperatures.[30]

Reducing Professional Liability

• Perform energy audits. Instrumented energy audits help find energy-related problems that can lead to insured losses. One tool used in this work is the infrared (IR) camera, which can detect electrical problems with motors, transformers, etc. that waste energy and can cause fires. IR cameras can also identify inefficient windows and gaps in insulation. Blower doors and pressure manometers are also valuable for energy audits, enabling a user to identify potentially dangerous pressure imbalances in a building that could lead to fire or health-related insurance losses if not remedied. Auditors can also perform indoor air quality measurements.
• ´"Commission" buildings. A major cause of litigation and contractor call-backs in new buildings is improper performance of building heating and cooling systems. A reemerging practice called"Commissioning" aims to increase quality control during design and construction, conduct formal functional testing and inspections of energy-using equipment to ensure that intended performance (and energy savings) are achieved, and provide for operator training. Energy savings of 10-30% can result when commissioning is performed in office buildings.[31] The second largest professional liability insurer of U.S. architects and engineers, DPIC, has taken a keen interest in promoting commissioning as a loss-prevention strategy and cites heating, ventilating, and air conditioning cases as the largest source and cost of claims for the company.[32] Legal experts have cited commissioning as a way to decrease the likelihood of professional liability lawsuits.[33] Current insurance industry efforts to improve quality control to prevent earthquake, wind or fire damage could be enhanced by verifying proper installation and performance of energy-saving equipment.
• Install energy-monitoring systems. An emerging field in energy efficiency uses sophisticated information technology to monitor and diagnose problems with energy-using systems and indoor air quality.[34] Intended energy savings can be verified and deviations from expected equipment operating patterns can be quickly detected and corrected. Undetected malfunctions can jeopardize life and or operation of the systems. Use of advanced information technology can help reveal and remedy problems that could otherwise lead to professional liability claims.
• Improve indoor air quality. As discussed in detail below, indoor air quality can be improved in conjunction with energy efficiency improvements. Indoor air quality problems are an increasingly common cause of litigation.[35] In the past, this litigation centered around exposure to contaminants in industry. However, due to increasing problems with asbestos, nonindustrial chemicals such as formaldehyde, and radioactive radon gas, litigation has expanded to the buildings sector. Sick Building Syndrome (SBS) raises the risk of professional liability for a widening array of professionals, including building owners, building managers, real estate developers, architects, engineers, general contractors, HVAC contractors, building product manufacturers, leasing agents, and consultants. Injuries alleged by plaintiffs include cancer, neurological damage, chemical sensitivity, pulmonary disease, and allergies. Indoor air quality suits have also focused on business interruption resulting from employee illness and reduced productivity.

Reducing Occupational Health and Safety Risks Related to Lighting

• Install energy-efficient lighting. Efficient lighting components often last longer than conventional lighting, which means a lower incidence of replacement-related injuries sustained while servicing lighting systems. Surveys of households installing long-lasting compact fluorescent lamps show an exceptionally high level of acceptance among senior citizens (who are uneasy about injuries from changing bulbs in hard-to-reach fixtures).[36]
• Install high-frequency electronic ballasts for fluorescent lighting. High-frequency electronic ballasts--one of the most successful energy-efficient technologies--offer numerous non-energy benefits.[37] By virtue of their nonflickering operation, electronic ballasts avoid certain negative health impacts linked to standard magnetic ballasts. In a double-blind study in the United Kingdom, office workers with high-frequency ballasts had less than half the incidence of headache and eyestrain as their co-workers in offices with normal 50-Hz magnetic ballasts. Agoraphobia and other manifestations of anxiety have also been observed to diminish in areas with high-frequency lighting rather than standard ballasts. Flickering light, from traditional inefficient ballasts can also trigger epileptic seizures in sensitive individuals. In some cases, electronic ballasts reduce the likelihood of fires that result from overheating the neutral wire by excessive harmonic distortion in some conventional ballasts.
• Install exit signs using light-emitting diodes (LEDs). LED exit signs save considerable energy and may reduce insured losses compared to incandescent or fluorescent exit signs.[38] Their 10- 20-year service life means improved reliability (and thus safety during emergencies) and less maintenance. The intense red LED light is highly visible through smoke. Given their low power demand, LED exit signs will operate longer during a power outage than traditional exit signs run by the same size battery.
• Install advanced windows; use daylighting. Two energy-saving strategies that have non-energy benefits are daylighting (facilitated by linking dimmable electronic ballasts to photocells) and advanced windows that admit visible light but reject unwanted heat gains or losses. People prefer to work by daylight; the absence of windows has been correlated with an increase in transient psychosis in hospitals and an increase in absenteeism in schools and factories. In humans, levels of melatonin appear to be influenced by daylight which may help explain seasonal affective disorder (SAD), a type of psychological and physiological depression that affects about 5% of the population.[39] In a California study, the absence of a nearby window was associated with increased"Sick Building Syndrome" symptoms.[40] Daylighting availability is also unaffected by power outages which can reduce business-interruption losses.

Reducing Indoor Air Quality Problems

About 20,000 deaths and ten times as many illnesses in the U.S. each year are attributable to indoor air pollution. Although most of these deaths result from indoor exposure to environmental tobacco smoke, radon, and carbon monoxide, significant health problems can arise from other contributors to poor indoor air quality.

The cost of lost work days, restricted activity at work, and medical treatment for respiratory infections amounts to an estimated $65 billion per year in the U.S. alone. The corresponding cost for allergies and asthma is $13 billion each year and for sick building symptoms is $25 billion each year. A preliminary estimate indicates these costs could be reduced by $18 billion per year through building-related measures. Failure of electronic equipment has also been linked to indoor air contaminants, including 20% of circuit board failures, costing $200 million per year in U.S. telephone switching offices.[43]

Increasing ventilation rates (which increases energy use) is the most common strategy for coping with suspected indoor air quality problems. However, potentially more effective and energy-efficient strategies are also available. These include proper pressure balancing, efficient air filtration, reducing air recirculation, individual control of office environment, improving cleaning practices, and reducing indoor pollutant sources.

In addition to physical design changes to reduce the likelihood of indoor air quality problems, commissioning methods (discussed above) can ensure correct design and construction of building components, and effective response to problems following building occupancy. Specific opportunities for improving energy-efficiency while addressing indoor air quality risks include:

• Mitigate indoor radon concentrations. The number two cause of lung-cancer deaths (13,000 per year) in the U.S. today is radon, a naturally-occurring radioactive gas that concentrates in homes.[44] Levels in homes can exceed occupational safety standards for uranium miners. There are ways to mitigate this problem, but some consume far more energy than others. Continuously-operating fans for example, use energy and increase ventilation rates, which increases heating and cooling energy demand.
• Install advanced energy-efficient combustion appliances. Efficient appliances offer particular indoor air quality benefits in the home. Traditional appliances rely on a thermally-induced stack effect to transport combustion products through the flue and outside the structure; however, outdoor conditions (temperature or wind) can cause backdraft and spillage of pollutants into the living space. This problem can also be triggered by other ventilation devices in a home (e.g., stovetop or bathroom fans and fireplaces), which create a negative pressure across the building envelope, thereby drawing pollutants back into the building. Efficient fan-assisted appliances can counteract these effects. Efficient sealed-combustion furnaces eliminate the need for a natural-draft flue altogether, so a home's natural air infiltration rate may be lowered without starving the furnace of essential combustion air.
• Eliminate leaks from residential ducts. Leaky ducts can cause dangerous positive or negative pressure imbalances in a home. Negative pressurization can place a dangerous suction force on combustion appliances and fireplaces, leading to backdrafting of carbon monoxide or to fire roll-out. Negative pressurization can also draw carbon dioxide from garages into homes. In hot, humid climates, negative pressurization draws moisture into wall cavities where it can condense, causing mold growth or severe structural damage to buildings. In cold climates, positive pressurization can force moisture-laden indoor air into walls where it condenses as it encounters cold surfaces. Leaky supply ducts can introduce moisture into attic spaces, and leaky return ducts can draw moisture from the living space into the attic. Both scenarios can lead to the formation of ice dams as moisture leaks out through the eaves or to water damage within the walls or ceiling. Duct retrofits utilizing an innovative new leak-sealing technology (Figure 5) have resulted in 60% reductions of duct air leakage and improved home pressure balancing.[45]

Figure 5. In 1994, Lawrence Berkeley National Laboratory designed, built and field-tested this in situ aerosol sealing apparatus. Besides performing the sealing process, the device also measures the leakage of the duct system before and after sealing. By injecting a fine aerosol, the device was found to seal approximately 60% of the leakage in the duct system in 15 minutes using only $6 worth of sealing material.

• Install energy-efficient heat-recovery ventilation. This technology can help avoid periods of low ventilation rates that can cause high concentrations of indoor pollutants. Not only does this reduce exposure to indoor pollutants, but it also can reduce the presence of damaging water vapor.[46] Problems with elevated water vapor levels in bedrooms were less severe in a series of homes that used heat exchangers to recover waste heat from exhaust air than in homes that did not.[47] There were more complaints about mold and mildew in the control homes than in the efficient homes using heat exchangers.[48]
• Use Airvests. Spray booths are a common sight in industrial buildings. Designed to remove pollutants during processes such as spray painting or welding, a spray booth is open on one side where the worker stands and equipped on the opposite wall or ceiling with a fan and filter to exhaust contaminated air. However, pollutants become trapped in the eddy that forms immediately downwind of the worker, and they then rise into the worker's breathing zone. A new energy-saving invention known as an"Airvest" (not yet commercially available) eliminates this dangerous eddy (Figure 6). An Airvest consists of a small air supply worn on the chest of a spray booth worker.[49] Laboratory measurements using smoke and a mannequin show enormous reductions of contaminants in the breathing zone, depending on how much air is ejected from the box. With Airvests, the ventilation rate in the spray booth could be substantially reduced. Reduction of the flow rate by a factor of two will save roughly $1,000 per shift per booth each year from reduced heating, cooling, and filtration of incoming make-up air.

Figure 6. Photographs of prototypical Airvest with fan off (left) and on (right). The chart below shows that spray booth ventilation rates can be reduced by 50%, while pollutant exposure in the breathing zone of the worker is reduced by about 30-fold.

• Install radiant hydronic cooling. This energy-saving strategy is widely used in Europe but little known in North America. It achieves energy savings by separating the tasks of providing cooling and fresh air.[50] In a radiant cooling system, cold water is used to cool ceilings, and thereby achieving improved comfort. Supply air can be provided separately (at 80 to 90% lower volumes because heat transport is not an objective) and recirculation is unnecessary. Transporting coolth by pumping water is much less energy-intensive than using air. In addition to saving substantial energy, radiant cooling avoids spreading odors and or other airborne contaminants through the building, reduces likelihood of drafts and noise due to lower volumes of air movement, and reduces space needed for the ventilation system. During power outages, cool water can be circulated with much less backup power than is required for a conventional air-conditioning system.
• Install demand-controlled ventilation (DCV). DCV uses variable-speed fans in conjunction with a sensor-feedback system to adjust fan speed. Fixed-speed ventilation allows virtually no outside air control. The DCV feedback system should reduce incidences of too-low and too-high outside air supply. During power outages, DCV systems can operate at lower speeds to ensure minimal levels of air circulation during a longer period of time than would be possible with full-speed operation of a ventilation system using a backup power supply. Fan variability could prove valuable in certain firefighting situations.
• Use strategies that save energy while reducing the amount of recirculated air. This family of strategies includes better air filtration, economizer cooling, and heat recovery in place of recirculation. Reduced recirculation may eliminate some pathways of indoor disease transmission. A controlled study compared the incidence of febrile acute respiratory diseases in army trainees in two sets of barracks;[51] heating, ventilating, and air-conditioning (HVAC) systems in the"modern" barracks recirculated approximately 95% of the air and provided three air changes per hour. In the"old" barracks, windows and ceiling exhaust fans were the primary source of ventilation, and the HVAC systems recirculated only 50% of the air. During 2.6 million trainee-weeks between 1982 and 1986, more than 14,000 acute respiratory disease hospitalizations occurred among soldiers living in the two sets of barracks. The ratio of new-to-old barrack hospitalization rates was 1.5:1, i.e., about 2,700 more admissions for occupants of the barracks that used predominantly recirculated air.
• Install energy-efficient heating controls. Especially in low-income housing, poorly managed central heating often means that tenants use gas stoves for space heating. The carbon monoxide and other combustion products thus generated are an obvious health concern here, in addition to the potential for energy waste. Improved heating controls in several apartment buildings showed significantly reduced"cooking" energy use (Figure 7).[52] (The energy dimensions of this situation depend on the details; if used to heat only the kitchen area, stoves are not necessarily inefficient.)

Figure 7. Seasonality of cooking fuel use decreased markedly following a heating controls retrofit in the Trenton Housing Authority.