Green insurance?
As businesses increase their efforts to become more environmentally friendly, a new buzzword looks set to catch their imagination - green insurance.
Already well versed in the benefits of recycling waste and using eco-friendly products, UK firms now have the option of taking out an insurance product, which can not only help them to pursue a more eco-friendly strategy - but also achieve cost savings.
But what is green insurance, and how can it help you go green?
Although still in its early days in the UK, ‘green upgrades’ for commercial buildings insurance is now starting to become available to those who want to upgrade their buildings or appliances to a higher green standard in the future.
It’s all about sustainability
Effectively, it enables them to claim for the complete rebuilding of their property, or the replacement of entire floors, using sustainable materials, in the event of major loss or damage. The product also allows for the reinstatement of existing appliances, such as lighting, with ‘greener’, more energy-efficient appliances, which use less power.
In this way, businesses can take a valuable first step towards having eco-friendly buildings and using appliances, which not only consume fewer resources, but also represent a lower insurance risk, thereby cutting both their future utility bills and insurance costs.
Green upgrades and the costs
"Increasingly there is a big link between being green and saving costs," says Sunny Seghal, senior manager, sustainable insurance at HSBC, adding that HSBC itself has taken out ‘green upgrades’ insurance for more than half of its buildings in the UK.
"Green upgrades will enable claimants to benefit from cost savings arising from reduced energy consumption."
He explains that although some ‘green upgrade’ products are now available in the UK, businesses interested in the product have to be aware that the onus is ultimately upon them to ensure that ‘green’ standards are built into their buildings when they make a claim.
"Some insurers are unclear in their terms as to what ‘green’ rebuild standards the insurance will pay out for, and leave this up to the customer," adds Seghal. "At HSBC we prefer to make it a default standard, as this makes the proposition more transparent and robust."
He adds that HSBC is planning to launch a green reinstatement insurance product specifically for smaller UK businesses in the near future.
Does green insurance make sense for small businesses?
Already, the concept of ‘green upgrades’ insurance is generating strong interest from members of the UK’s small business community.
"I think it’s a no-brainer," says George Bramble, sales director at Becothings, a manufacturer of hangers, pet and baby products, which was set up specifically to meet demand for domestic eco-friendly products, and whose commitment to green policies led to its winning the Green category in the HSBC’s Start-Up Stars Awards for 2009. "If you can upgrade to a green standard that’s going to help you in the long run, and keep down the cost of your utilities, then it’s a good thing.
"We as a company are not just focused on producing eco-friendly products, but try to do everything in a green way," he continues, pointing out that Becothings is committed to using not only eco-plastics, but also eco-friendly packaging, across its product range. "A lot will depend on its cost, but ‘green upgrades’ insurance is something we would be keen to get involved with. If we find services and products that are green and affordable, then we always use them."
In addition, look out for HSBC’s new "A guide to doing business in the low carbon economy" to be featured in April’s Business matters.
- Read about HSBC’s commitment to sustainability
- The briefings "Insurance" and "Insurance to protect your business" give further information
- BREEAM is the leading environmental assessment method for buildings
- Becothings’ website gives an overview of their products
- HSBC offers a variety of business insurance products
