The success of a pilot program testing two innovations for more sustainable insurance claims has compelled Co-operators Group Ltd. to roll out the techniques nationwide to reduce loss-related waste generation.
From December 2022 to June 2023, the Guelph-based insurance co-operative trialed drying in place and the cleaning of soft contents with 158 clients as an alternative to replacing materials or belongings as part of insurance claims.
Karen Flamand, an associate vice-president for claims shared services and an initiative lead on the resiliency and sustainability program at Co-operators, said in an interview with Sustainable Biz Canada the pilot is part of efforts to reshape how insurance adapts to growing climate and environmental concerns.
“Our ambition is to use this data and experience we have as a proof of concept that shows the industry we can re-imagine insurance,” she said.
Client reactions from the pilot also illustrate Canadians are interested in sustainable insurance options, even beyond Co-operators’ expectations, Flamand noted.
Trialing the two techniques
If a building insurance claim is made, the affected materials are traditionally pulled out from the structure and taken to a landfill. Typically, the materials are replaced. Most of the time, the replacement materials are neither sustainable nor resilient, according to Flamand.
This process generates embodied carbon from the disposed materials and requires the creation of more materials, which contributes to increased greenhouse gas emissions.
Flamand said each year, approximately 50,000 Co-operators' insurance claims would generate about 116,000 tonnes of waste.
Seeking a solution, Co-operators conducted research on what insurers in Europe are doing. It discovered Swedish firms are using drying in place and soft contents cleaning to reduce waste. There was little implementation of these two methods in Canada, which led Co-operators to explore the two in a pilot program where it is feasible for claims, Flamand said.
Drying in place uses fans to dry out water-damaged carpets, drywall and flooring within 48 hours, instead of tearing out the materials.
Soft contents cleaning uses specialized equipment to return fabric-based materials and objects like clothing or linens to their original state.
“It reduces what’s going into landfill, it reduces emissions and it shortens the amount of time and the inconvenience for clients as well, and it saves money,” Flamand said of the advantages of drying in place.
Co-operators ran a targeted pilot in Alberta and British Columbia which reduced carbon dioxide emissions by an estimated 120.66 tonnes. Flamand said its benefits will be further realized as Co-operators expects to serve 3,000 claims per year with drying in place and soft contents cleaning.
Defying expectations for interest
Co-operators was pleasantly surprised by the positive feedback it received from the pilot, Flamand said. The company’s expectations that clients would demand “everything be replaced all the time” was unfounded – many were open to considering the more sustainable options.
One client expressed relief their carpet did not end up in a landfill, which Flamand said underscores the changing societal attitudes to focus on sustainability. Additionally, soft contents are often time-consuming to replace or have sentimental value.
The pilot was so successful, Co-operators scaled-up its offering across most of Canada since July. In Quebec the offering will start in 2024.
Its restoration vendor networks were also interested in the methods, Flamand said, and welcomed learning about sustainable restoration.
There had to be accommodation for clients as the fans for drying in place are loud and could disrupt work from home or comfortable living. Co-operators offered to put up its clients in hotels if the noise was problematic.
A better model for insurance
Co-operators hopes the pilot will help create a more sustainable insurance industry. The reconstruction sector, Flamand said, rarely uses more sustainable and resilient options because of the cost – 15 to 20 per cent more.
Under current insurance models, on a warming planet insurance would become “unaffordable and inaccessible for people across Canada.” Flamand cited the destruction brought on by extreme weather in Canada made more likely by climate change, causing billions in economic damage.
But if the insurance industry becomes more sustainable and resilient, combined with efforts to reduce environmental impact, insurance will remain affordable, she said.
The savings from the more sustainable options Co-operators is adopting can be put into more resilient coverage, instead of toward the company’s bottom line.
If a customer submits a claim for a carpet, for instance, Co-operators could offer a sustainable carpet option as a replacement. Co-operators also wants to go further by pre-emptively replacing equipment before it causes a loss, Flamand said.
Co-operators will continue to research sustainable claims, she added. In 2024, it will partner with its restoration vendor network to explore additional practices for sustainable and resilient claims handling.
It also invests billions in impact investments to address climate solutions such as renewable energy projects. By 2026, Co-operators hopes to have 50 per cent of its portfolio in impact investments, and 60 per cent by 2030, the company. has stated