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Green Insurance: Managing Risks of Going Green

One of the latest Buzzwords in the Insurance Industry is Green Insurance.Going green may be the demand of the day,

but doing so may not be an easy task and comes along with a whole lot of risks which need to be managed.

This also throws an opprotunity to Insurance providers to introduce new products and service offerings in the market.


For example, who does not know the benefits, its social and environmental impact, of a green building? But, the

area of risks associated with it is still a relatively unexplored area. Some of the questions which immediately

come to mind are: What are the laws and standrads of a green building? What are the tools, processes available to

measure them? Who is the authority to implment them? What are the voilation clauses and penalties associated with


Here comes the relevance of Green Insurance.Insurance providers worldwide are working with Customers to make them

knowledgeable on 'green standards' and the potential challenges in adopting them.This helps customers to understand

the policy cost associated with green endorsements and the benefits around it. In fact, the awareness of this

coverage is still low in the market. According to various surveys conducted globally, customers/ key decision makes

in the organizations are not too sure whether Green Insurance is included in the Commercial propoerty insurance

contracts and what the entitlements are.

However, most of the leading insurance companies in the world have already designed the Green policy offerings over

the last two years. It is true that it has increased the policy premiums; however, considering the increase in the

asset value of such green porpoerties and lower operating costs, the delta increase in policy cost is worth

bearing, as most customers in the market feel.

Since going green is the norm of the day (for eample, to date United States Green Building Council has registered

more than 100,000 buildings for LEED (Leadership in Energy and Environmental Design). This has opened a new market

for insurance providers; green insurance products are not only being developed and offered for certified green

buildings, but also for traditional properties upgrading with green features.



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