The benefits of insurance as a catalyst for investment in energy efficiency

EiD has provided recent posts on the role that the insurance industry can play to promote energy efficiency. ClickGreen writes about the role that energy efficiency must play to meet our climate targets and the role that the insurance industry can play to help.


50% of emissions targets will need to be reached by energy efficiency

Specialist engineering and construction insurer HSB Engineering Insurance (HSB), as part of Munich Re, recently addressed key brokers about the benefits of insurance as a catalyst for investment in energy efficiency projects.

Speaking at the briefing Paul Cullum, Product Development Manager at HSB, who recently presented to the United Nations Environment Programme on the subject, explained that 50% of national energy and carbon reduction targets will need to be achieved by energy efficiency.

He further explained that by 2050, 80% of today’s buildings will still exist, and will all need to benefit from improved energy efficiency.

A recent incentive for investment in energy efficient projects has been the introduction of the Energy Act 2011. This proposes that from April 2018 it will be against the law to agree new leases on commercial properties that have not achieved the minimum of Energy Performance Certificate (EPC) rating ‘E’. Currently, 18-19% of commercial properties in the UK have an ‘F’ or ‘G’ rating.

HSB’s energy efficiency insurance product is believed to be the first of its kind and offers a number of significant benefits to those receiving, delivering and funding energy savings, including cover for material damage (including equipment breakdown) of the installed systems, business interruption (protecting against loss of revenue in the event of equipment failure) and asset performance insurance covering a shortfall in energy savings.

Paul commented: “With around 40% of all energy we consume used by buildings, there is an increasing need for commercial properties to become more energy efficient, thereby cutting both carbon emissions and costs. This can be achieved by installing energy saving initiatives, such as LED lighting, thermal window films and more efficient boilers.

“However energy efficiency projects bring with them a need to protect the assets installed, the revenues they generate and the potential savings they produce. At HSB Engineering Insurance we saw a gap in the market for a product which could provide the right amount of insurance cover to protect such projects and help improve access to funding.”


4 thoughts on “The benefits of insurance as a catalyst for investment in energy efficiency

  1. It would be interesting to learn from other insurance companies if they intend to launch similar products; and if not, why not?

    1. Will do some checking around. I know insurance companies are looking into the industrial sector in Europe. But let’s see if we can find more out.

      1. Have a look at this website. You may have to use Google translate. The person I’ve met is Raphael Lehne, who was CEO and maybe still is. He’s very good.

        We have also heard that reinsurance companies such as Zurich Re and Munich Re have shown an interest and may actually be interested. There is a growing interest, in part because of climate risk.

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