Allianz and HSBC Insurance as global players share an interest: sustainability is a priority for both companies and they are keen to ensure their products offer green and sustainable benefits to their customers, wherever possible.
HSBC – the world’s local bank with over 100 million customers – is also a major insurer, with more than 15 percent of its total profits in the first half of 2009 coming from both life and non-life insurance products. Under its bancassurance strategy for personal and business customers, HSBC distributes Allianz Global Corporate & Specialty (AGCS) products in several countries, with Allianz being a preferred strategic partner of HSBC.
How does a financial services company offer relevant green insurance products? At HSBC, green buildings insurance was identified as a valuable opportunity.
‘First generation’ green insurance products consist of donating part of the premium to charity. This concept continues to be successful in both Latin America and Asia Pacific.
‘Second generation’ green insurance products actually aim at embedding the green element in the product itself. The concept of green reinstatement is fairly easy to understand. If there is a loss, the insurer repairs the damage in a ‘greener’ way than normal.
Leading by example
When HSBC Insurance decided to offer green products, the first step was to lead by example. This is how the idea of implementing green reinstatement within HSBC’s own buildings insurance came about. The multi-regional program is underwritten by AGCS and covers several thousand offices, branches and data centers worldwide from which HSBC operates.
Sunny Sehgal of HSBC Insurance summarizes the benefits: “The new reinstatement clause allows HSBC to rebuild according to more advanced environmental standards than would have been possible otherwise (under the regular reinstatement) and so fits well with the environmental management system that HSBC operates across its corporate real estate. In monetary terms, the clause allows an additional five percent on top of the ‘normal’ insured loss amount, and incurs only minor additional premium.”
Encouraging green design as part of claims management
Green reinstatement has become possible through the increasing use of government approved environmental standards and green building codes, such as the United States’ Leadership in Energy and Environmental Design (LEED) and the Building Research Establishment Environmental Assessment Methodology (BREEAM) in the UK. These codes are more stringent than the local minimum legal and planning requirements covering, for example, energy use and carbon emissions, water efficiency and sustainable materials. By inserting the green reinstatement clause, the insurer is playing a vital role in encouraging green design as part of claims management. Ultimately, it is up to the client to decide whether to use this benefit.
Fireman’s Fund, the U.S. Allianz company, one of the forerunners in developing a green insurance product created the dialogue with HSBC.
“Extending our green portfolio for the benefit of our customers”
Gavin Lillywhite, Account Manager at AGCS for HSBC on the multi-region program, comments, “As part of our regular client dialogue HSBC approached us with this green proposition, we listened to their request and by working closely with them we developed a solution that was both flexible and effective. In the future insurers can help their clients increase sustainability by offering a sustainable reinstatement product, provided the premium is reflective of the increased exposure.”
This initiative has directly led to the green reinstatement benefit being offered to HSBC’s customers through several HSBC home insurance products around the world. In Hong Kong, for example, where HSBC Insurance manufactures home and contents insurance, if a customer has an accident with a household appliance, such as a refrigerator, room cooler, washing machine, dryer or water heater, they will receive a replacement with a green energy saving label at no additional cost.
Martin Brewer, Head of Strategic Partnerships & Green Insurance at HSBC, states: “We care passionately about the environment and know many of our customers feel the same way. So, for us it is important to develop and exchange best practices with our preferred partner Allianz and share the sustainability skills and expertise between the two market leaders. We are looking forward to continuing our successful collaboration and extending our green portfolio for the benefit of our customers.”