Thursday, 13 August 2020

Commissioner Lara launches first-ever database of green insurance products

California Insurance Commissioner Ricardo Lara formally launched the Climate Smart Insurance Products Database, the first-ever consumer-oriented list of green insurance policies.

With hundreds of climate-related insurance products already available to consumers and businesses, the California Department of Insurance has developed this database to help the public understand and access these products and encourage further insurance policy innovation in commercial, homeowners and auto lines, among other lines.

Recognizing the potential for specific insurance products to address climate risks and contribute to a sustainable future will encourage consumers and insurance companies to explore products that harness new technologies and promote resilience.

“Understanding, preventing, and reducing climate risk is of paramount importance, and we need innovative insurance solutions to accelerate the transition to sustainable and resilient communities and economies,” said Commissioner Lara. “When disaster strikes, insurance can help damaged homes, buildings, and vehicles be built back better, stronger, and greener and springboard into the cleanest technologies.”

The Climate Smart database lists more than 400 products currently available to consumers and businesses that address climate risks, harness new technologies, and build resilience.

They include insurance products and solutions that, among other products:

– Provide green-rebuild coverage, providing a pathway to building back stronger, more energy-efficient, and lower-emission buildings and vehicles;
– Promote fuel-efficiency by offering lower premiums for low-emission vehicles;
– Provide discounts for green energy use and energy efficiency certification;
– Provide discounts for businesses who operate hydrogen and hybrid electric buses;
– Protect low-income communities and natural ecosystems.

A June 1, 2020, report from the environmental nonprofit group Ceres recommends the development of a database of innovative insurance products that reduce emissions or increase resiliency.

"California Commissioner Lara and his team at the California Insurance Department deserve great credit for creating the Climate Smart Insurance Products Database,” said Steven M. Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets. “This is part of a comprehensive insurance approach to climate risks. This database is a critical building block for a more sustainable future."

The database is another element in Commissioner Lara’s strategy to combat climate change. Last year, Commissioner Lara announced an agenda-setting effort with the United Nations to create a Sustainable Insurance Roadmap, a comprehensive climate change strategy and action plan that is envisioned to pave the way for innovative risk management, insurance, and investment solutions that reduce climate risks and protect natural ecosystems.

“One of the United Nations’ Principles for Sustainable Insurance promotes the aim of insurers working together with governments, regulators and other stakeholders in promoting widespread action on sustainability issues, and Commissioner Lara is showing us what regulators can actively do to make that happen and drive innovation,” said Butch Bacani, who leads UN Environment Programme’s Principles for Sustainable Insurance Initiative (PSI), the largest collaboration between the UN and the insurance industry. “With this pioneering database, Commissioner Lara is demonstrating sustainability leadership, and we hope that other regulators will step up to the plate and lead by example.”

Commissioner Lara previewed the database on July 8, 2020, at an international virtual event convened by the UN PSI and Swiss Re on sustainability leadership in insurance, which attracted more than 700 participants from over 60 countries.

In addition to working with the UN, California will be collaborating with Washington State Insurance Commissioner Mike Kreidler to build on this innovative database.

California and Washington State have been working together with the UN Environment Programme as members of the PSI as well as the Sustainable Insurance Forum for regulators.

“I applaud Commissioner Lara and the California Insurance Department’s thoughtful initiative to make the full range of existing climate-related insurance products available to consumers and businesses,” said Commissioner Kreidler. “Providing this innovative access to these products encourages communication between policyholders and their insurers, and will no doubt lead to new ideas and more refined climate-related insurance products going forward.”

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