Sustainability in Action: Transforming P&C Claims Management

Property and casualty (P&C) insurance plays a crucial role in protecting individuals, businesses, and communities from financial losses caused by unforeseen events. However, the industry is increasingly pressured into adopting sustainable practices to address climate change, regulatory shifts, and evolving customer expectations. By integrating sustainability into the claims process, insurers can enhance environmental stewardship, improve operational efficiency, and foster long-term resilience. This article examines the concept of sustainability in P&C claims, the challenges insurers face, and the strategies they can implement to create a sustainable claims ecosystem.

Sustainable claims management is a progressive approach by the insurance industry to integrate environmental, social, and economic considerations into the processing of claims. By adopting sustainable practices such as waste reduction, energy-efficient repairs, and eco-friendly materials, insurers seek to minimize their carbon footprint and deliver long-term cost savings for stakeholders. This approach transcends traditional financial settlements, focusing on asset restoration that aligns with global sustainability goals. In the face of escalating climate risks and shifting customer expectations, sustainable claims management emerges as a key strategy to build trust, ensure regulatory compliance, and gain a competitive edge—all while contributing to a sustainable future.

Drivers of Sustainable Claims Management 

• Increased Volume of Catastrophe Claims: The frequency and severity of natural disasters, driven by climate change, have placed a significant strain on P&C insurers. Hurricanes, wildfires, and floods cause extensive environmental damage and lead to substantial claims payouts. Sustainable claims management offers a way to reduce the industry’s environmental footprint while supporting resilient rebuilding efforts.
  According to AON’s 2024 Climate and Catastrophe Insight Report, global insurance losses from natural catastrophes reached USD 118 billion in 2023, marking the fourth consecutive year that these losses have exceeded USD 100 billion.
• Regulatory and Stakeholder Pressure: Governments and regulators worldwide are increasingly pushing businesses to adopt sustainable practices. ESG (Environmental, Social, and Governance) reporting has become standard, with stakeholders demanding transparency in how insurers manage their claims processes.
  Under the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) and the International Financial Reporting Standards (IFRS S2), insurers are required to estimate claims emissions—alongside other sustainability impact—and implement strategies to reduce them.
• Policyholder Expectations and Preferences: Policyholders are becoming more environmentally conscious, preferring insurers that offer eco-friendly claims solutions. Options such as repairs using sustainable materials, energy-efficient replacements, and waste-reducing practices resonate with their personal commitment to sustainability. These preferences allow policyholders to contribute to environmental preservation while addressing their claims needs.
• Mounting Pressure for Cost Management: Cost management is a critical factor driving the adoption of sustainable claims practices. Prioritizing repairs over replacements, using durable and energy-efficient materials, and minimizing waste allow insurers to reduce settlement costs while delivering long-term value to policyholders. Sustainable practices also help lower the frequency and severity of future claims. For instance, climate-resilient repairs further reduce overall expenses. Additionally, leveraging digital tools and eco-friendly processes enhances operational efficiency, cutting administrative costs.
• Mounting Pressure for Cost Management: Cost management is a critical factor driving the adoption of sustainable claims practices. Prioritizing repairs over replacements, using durable and energy-efficient materials, and minimizing waste allow insurers to reduce settlement costs while delivering long-term value to policyholders. Sustainable practices also help lower the frequency and severity of future claims. For instance, climate-resilient repairs further reduce overall expenses.
  Additionally, leveraging digital tools and eco-friendly processes enhances operational efficiency, cutting administrative costs.
  This pragmatic approach aligns profitability with environmental responsibility, making sustainability a sound choice for modern claims management.

Implementation of Sustainability in Claims Management:

• Claims Supply-chain Optimization: The claims supply chain is pivotal in insurance operations but is also a significant contributor to carbon emissions due to activities such as repair, reconstruction, and logistics. Insurers collaborate with contractors, suppliers, and service providers whose processes often generate substantial greenhouse gases (GHGs). To address this, insurers are increasingly adopting sustainable procurement practices, partnering with vendors who use eco-friendly materials, such as renewable resources, for property repairs. They also leverage digital tools like predictive analytics to streamline supply chain logistics, reducing unnecessary transportation and its associated emissions. Additionally, embracing circular economy models—which focus on recycling and repurposing materials during repairs—helps minimize waste and carbon footprints. These strategies reduce the environmental impact and enhance operational efficiency, aligning the claims process with sustainability goals.
  • Swiss Re uses the EcoVadis sustainability assessment platform to evaluate whether its suppliers comply with its UNGC-aligned group sourcing standard. The platform enables the insurer to systematically measure supplier performance and, where necessary, help them improve.
  • Crawford & Company, the world’s leading publicly listed claims service provider, incorporated sustainability criteria into its purchasing policies as part of its sustainability commitment. This includes selecting vendors that offer eco-friendly solutions, using fuel-efficient, low-emission fleet vehicles, implementing programs to reduce energy consumption in data centers, and aggressively adopting audio and video conferencing to minimize the impact of travel.
• Sustainable Adjusting Practices: Traditional claims adjusting practices are often travel-intensive, requiring field adjusters to visit damaged properties to assess losses, leading to significant fuel consumption and associated emissions. To reduce this impact, insurers are adopting remote assessment technologies. Tools like drones, satellite imagery, and AI-driven platforms enable virtual inspections, minimizing on-site visits while maintaining accuracy and efficiency.
  Additionally, telematics and IoT devices are used to remotely monitor and assess damage—such as water leaks or structural instability—providing real-time data without requiring physical travel. These innovations reduce carbon footprints and streamline the claims process, making it faster and more cost-effective.
  • To further enhance efficiency, insurers are shifting from traditional field-based adjusting to desk-based or remote adjusting, particularly for low-severity and low-complexity claims. Insurers use electronic data, such as pictures, videos, and FNOL transcripts, to assess losses, create content inventories, and prepare estimates using tools like XactContents, XactAnalysis, Xactimate, and Symbility.
  • Davies Group, a global insurance claims service provider, is integrating sustainability into its claims service delivery. This is achieved through initiatives such as route optimization, a field visit scheduling system, and desk-based video technologies for remote adjustment.
• Eco-friendly Restoration and Repair: Reconstruction and repair processes following disasters are highly resource-intensive and significantly contribute to global carbon emissions, with construction activities alone accounting for 11% of these emissions. To address this, insurers are integrating green building standards into their claims practices, encouraging the use of energy-efficient techniques and materials, such as solar panels, sustainable insulation, and advanced HVAC systems that reduce energy consumption.
  Partnering with eco-friendly contractors who comply with certifications like LEED or BREEAM further ensures that reconstruction efforts align with environmental best practices. Insurers are also investing in carbon offset programs to mitigate emissions generated during these activities, balancing the environmental impact of necessary repairs. These strategies promote sustainability while enhancing the resilience and efficiency of rebuilt structures.
  • Zurich Insurance promotes and authorizes repairers to use green parts for vehicle repair or restoration. Similarly, Allianz UK collaborates with SYNETIQ, a recycling company, to source green parts from damaged vehicles for subsequent repairs.
  • Sedgwick, a leading global provider of claims management, loss adjustment, and technology-enabled business solutions, announced the launch of its sustainable damage management solutions in the UK in July 2024. This service integrates comprehensive damage recovery with environmentally conscious practices from the outset of loss incidents. The initiatives include an emphasis on restoration, more energy-efficient drying, the use of resilient repair materials, and the repurposing and recycling of waste streams.
• Selection of Low/No-mission Transportation and Logistics:Transportation and logistics are significant contributors of emissions within the claims process, involving the movement of adjusters, vendors, and materials. To decarbonize this aspect, insurers are transitioning to electric and hybrid vehicle fleets, reducing the reliance on fossil fuels for claims adjusters and logistics partners.
  AI-powered route optimization tools are used to streamline travel paths for adjusters and delivery trucks, reducing fuel consumption and travel time. Another impactful strategy involves promoting shared mobility solutions, encouraging adjusters and stakeholders to use shared transportation for site visits. These measures collectively reduce emissions, enhance efficiency, and align transportation practices with sustainability goals.
  • QuestGates, a leading claims service provider in the UK, announced its ‘Environmental and Sustainability Plan 2020’ to ensure the company’s sustainable development and growth. The plan aims to drive digitalization, engage suppliers in exploring innovative building techniques to reduce landfill waste, increase the usage of electric vehicles by 20%, and reduce business travel by 40%.
• Technology for Green Claims Processing: Digital transformation allows insurers to reduce emissions and improve efficiency in claims processing. Traditional methods, such as paper-based workflows, in-person interactions, and manual processing, contribute to a significant carbon footprint. By adopting paperless operations, insurers can eliminate paper through digital documentation and e-signature solutions, reducing waste and streamlining processes. Additionally, leveraging AI and automation in fraud detection, policy management, and customer communication reduces the reliance on physical resources and manual labor. These advancements support sustainability and create faster, more reliable claims processes, aligning with the demands of a modern, eco-conscious market.
  • Woodgate & Clarke, a UK-based adjusting service provider, launched Quadrassist Desktop Adjuster, a service designed to manage claims of up to £10,000 through desk services. This initiative helps insurers reduce emissions, cut costs, expedite the claims process, and improve operational efficiencies.

Potential Benefits of Sustainable Claims Management

• Cost Efficiency and Waste Reduction: By adopting sustainable practices, insurers reduce material and operational waste. For instance, using recycled materials in repairs or partnering with eco-friendly suppliers lowers costs and contributes to environmental conservation. Digital claims processing minimizes paper usage and speeds up resolution times, reducing administrative expenses.
• Enhanced Brand Reputation: Demonstrating commitment to sustainability improves the insurer's public image and fosters customer loyalty. Customers prefer companies that align with their values, and sustainable claims management can set an organization apart in a competitive market.
• Regulatory Compliance: Governments and industry bodies are increasingly mandating sustainability measures. Implementing sustainable practices helps insurers stay ahead of regulations, avoiding potential penalties and maintaining good standing with regulatory authorities.
• Improved Client Retention: Offering eco-friendly solutions, such as green restoration options or energy-efficient replacements, appeals to environmentally conscious clients. This can lead to higher satisfaction and retention rates as customers perceive added value in their claims experience.
• Operational Resilience: Sustainable claims management emphasizes risk reduction and long-term planning, such as using durable materials in repairs to withstand extreme weather conditions. This reduces the likelihood of repeat claims and enhances operational efficiency.

Challenges of Sustainable Claims Management

• Higher Initial Costs: Transitioning to sustainable practices often requires upfront investment, such as training staff, adopting modern technologies, or sourcing eco-friendly materials. These costs often restrict the adoption of sustainability, especially for smaller insurers with limited budgets.
• Limited Supplier Availability: Finding suppliers and contractors who align with sustainability goals can be challenging, particularly in remote or less-developed areas. This can delay claims processing and increase operational complexity.
• Customer Resistance: Not all policyholders may prioritize sustainability, particularly if it results in high out-of-pocket expenses. For instance, customers might resist eco-friendly repair options if they perceive them as more expensive or less dependable.
• Integration with Existing Processes: Aligning sustainability with established claims workflows can be complex. It may require overhauling legacy systems and retraining staff, leading to temporary disruptions in claims management efficiency.

Conclusion:

Sustainability in claims is no longer optional—it is a business imperative. Insurers that lead the way in this transformation will not only benefit the planet but also gain a competitive edge in a rapidly changing market. The journey towards sustainable claims is a testament to the industry's resilience and commitment to a better future for all. However, making P&C claims sustainable is both a challenge and an opportunity. By embracing eco-friendly practices, leveraging technology, and fostering collaboration, insurers can build a claims process that is efficient and environmentally and socially responsible.