Green Building Insurance

Sustainability and "Green" are Growing Business Concerns

Did you know that 2 out of 3 businesses have an internal sustainability plan? Or that one of the main drivers for corporate sustainability is risk management? Did you know that over 40% of new non-residential buildings are being built "green" or that nearly 33% of non-residential building retrofits will become LEED certified?

These trends reflect the strong economic and business case that green buildings, sustainable products and business practices carry.

As more and more of your insurance customers move to embrace green and sustainability, will you be there to support them? Your clients will eventually come to you as a trusted insurance advisor to try to understand the potential risk and insurance connections to green and sustainable practices.

Will that advisor be you? Or will it be your competitor?

Types of Green Insurance

Green insurance coverage forms cover the liability associated with the unique design, production and use of sustainable strategies and green products. Green forms and endorsements can provide a backstop against promises of green energy performance, specific energy conservation measure (ECM) claims. They can also provide coverage for renewable energy projects, and green building upgrades in the case of covered claims.

The following are types of commercial green and green building insurance:

• Upgrade to Green Commercial Fleets
• Insurance on Renewable Energy Projects
• Insurance for Renewable Energy Property, Equipment and Loss of Use
• Insurance for Green Building
• Energy Savings Insurance
• Insurance for Carbon Capture & Storage/Emission Reduction Projects
• Green Building Coverage Against Adverse Publicity
• Political Risk Insurance for Carbon Trading

Green Risk Management and Sustainability

Now is the time to learn about the insurance and risk management aspects of green and sustainability. The Sustainable Risk Management Certificate program presented by Stephen Bushnell, the internationally renowned expert on green risk and insurance products can give you the knowledge you’ll need to compete in the 21st century.

A study by MIT Sloan School of Management found that 68% of business executives increase their commitment to corporate sustainability over the last year. The vast majority see this commitment as a core strategic consideration.

KPMG’s “Corporate Sustainability, A Progress Report” concludes: "The evidence that sustainability is becoming a core consideration for successful businesses around the world grows stronger every day. Sixty-two percent of companies surveyed have a strategy for corporate sustainability, up from just over half in February 2008. Regulatory requirements, brand enhancement and risk management remain key drivers of sustainability. Sustainability is being viewed as a source of innovation—and new growth. Forty-four percent of executives agree sustainability is a source of innovation, and 39 percent see it as a source of new business opportunities."

According to the US Green Building Council, it is estimated that in 2015, 40-48% of new nonresidential construction will be green, equating to a $120-145 billion opportunity. More than 3.6 billion square feet of building space are LEED-certified (as of January, 2015).

Compared to the average commercial building, the LEED Gold buildings in the General Services Administration’s portfolio:

• Consume 25% less energy
• Use 11% less water
• Have 19% lower maintenance costs
• Enjoy 27% higher occupant satisfaction

Current market trends suggest that building owners and managers will invest an estimated $960 billion between now and 2023 on greening their existing built infrastructure. This year, the green share of the largest nonresidential retrofit and renovation activity will more than triple, growing to 25-33% of the activity by value. Firms that completed green building retrofit projects report:

• Decrease in operating costs: over one year, 9%; over five years,13%
• Expected increase in asset valuation according to building owners: 4%

According to a Business Insurance online survey of 315 executives who influence and participate in decision-making in their organizations, 36% said they are not sure whether their commercial property insurance was designed to include green buildings. Thirty-four percent said it is not, and only 30% said their coverage includes green buildings.

Meanwhile, of those who have green insurance, 32% said they searched themselves for the coverage, and only 28% said a broker advised them to switch to green coverage or add an endorsement for green features.

Of 212 respondents who said their commercial property insurance does not cover their green buildings, or they were unsure about the coverage, 62% were unaware that green insurance or specific endorsements are even available.