Insurance companies should reward sustainability

In a recent conference in German Council for a Sustainable Development there were voices raised that the insurance companies should be more involved. This makes sense in two ways, the local and the global . If buildings and processes are made more energy efficient it seems likely that losses are reduced and could even have such direct effects as preventing e.g. fire hazards. It would also be likely that someone that has a better control of energy efficiency and make use of renewable locally available fuels have hedged himself better against some price risks. Such risk reductions should naturally be rewarded with risk premiums. Globally such actions reduce the risks of climate change and the associated hazards which should also be rewarded though it may be harder to calculate the premium.

There is however a recent study "From Risk to Opportunity" that gives concrete examples on how insurance companies could act. This reports that insurer-initiated hurricane-loss prevention methods saved 500 MUSD in Hurricane Katrina and cost 2.5 MUSD to install. The following figure shows that risks from winter storms in Europe are not negliable though these may not be of hurricane-strength.