Viewpoint: The Path to Greener Claims, Leaner Costs, and Reduced Repair Expenses

The increasing emphasis on incorporating sustainability initiatives to fight climate change and ensure a greener world for future generations has led many organizations across various industries to reevaluate their practices. These efforts are, in part, attributed to increasing consumer pressure for more environmental responsibility and accountability from businesses and governments.

Concurrently, consumers are doubling down on personal commitments and behaviors to reduce waste and carbon footprints. In fact, a 2023 PwC survey noted 77% of consumers are willing to pay more for recycled, sustainable or eco-friendly products.

What’s more encouraging is this push for greater environmental responsibility extends beyond typical consumer goods industries. For example, auto insurers are not only embracing environmental responsibility, but they’re beginning to incorporate data from the carbon footprints of automobiles and accidents into claims processes to promote environmentally responsible driving and even incentivize the use of low-emission vehicles.

Bill Brower

By aligning insurance premiums with driving behavior and environmental impact, insurers can better respond to consumer demand for green policies and greener claims processes and, in turn, save consumers a bit of money.

Data-Driven Claims Assessment for Greener Claims, Lower Costs

Auto insurance premiums have increased 26% percent over the past year, primarily driven by a 16% increase increase in auto accidents over five years, higher labor costs and parts shortages, and increased new and used vehicle prices.

Insurers seeking to bring down premiums to attract and retain customers while supporting their sustainability initiatives should consider data-driven solutions, such as estimatics, to help with the claims and repairs process. These tools leverage data, technology, and partnerships to measure, analyze, and offset Scope 3 CO2e emissions, providing greater insight into emission activities throughout the claims journey. They can also encourage stronger collaboration across third parties to identify more sustainable options during a repair.

This could involve repairing damaged parts, such as bumpers, doors, and fenders, instead of replacing them with new parts, which prevents them from going to a landfill. It also means fewer emissions and lower costs from shipping new parts through a complex supply chain. For example, using recycled parts during a repair could reduce costs by $35 and CO2 emissions by 30 kilograms. This could save the consumer money on their claim and premiums and improve the overall customer experience.

The data collected from auto accidents and the subsequent claims process can not only address sustainability challenges among auto insurers but can be used to promote environmentally responsible driving.

Encouraging Environmentally Responsible Driving

One of the first things we’re taught when learning to drive is to respect other drivers, avoid excessive speeding, and always keep our eyes on the road. The bottom-line message is: responsibility. But as consumers become more environmentally conscious, they expect insurers to toe the line. In fact, a Solera global survey found 75% of consumers would switch to an insurer that could prove its sustainability credentials.

Insurers can respond to this by recognizing and incentivizing responsible driving behavior by offering discounts and rewards to policyholders who exhibit safe and eco-friendly driving habits. This can include drivers who closely adhere to speed limits, use the most eco-conscious route to get to their destination, or avoid revving the engine or idling.

Additionally, insurers have an important role in incentivizing the purchase of low-emission vehicles. In fact, some insurers offer discounts to drivers who purchase a hybrid vehicle. Insurers can also offer discounts for vehicles that use alternative fuel or energy sources such as electricity, hydrogen, natural gas, ethanol, or biodiesel. Providing monetary incentives for eco-friendly vehicle purchases can help insurers boost their green transportation goals and supporting their sustainability initiatives while reducing emissions.

These incentives, when taken by drivers, can help alleviate pressure on an insurer’s supply chain network. Essentially, environmentally responsible driving could lead to a decline in accidents, resulting in fewer parts and lowers the emissions associated with its transportation. It can also reduce repair shop workloads by minimizing the number of vehicles waiting to be repaired, streamlining the claims process, and improving efficiency, leading to more satisfied customers.

Ultimately, encouraging safer, environmentally responsible driving reduces the overall carbon footprint and contributes to a more sustainable auto insurance industry.

Brower is senior vice president of industry relations and claims solutions at Solera. He has more than 30 years of experience, having led claims teams for companies including Nationwide Insurance, Liberty Mutual Insurance and LexisNexis Risk Solutions.