How are insurers supporting the circular economy?
More businesses are embracing the principles of the circular economy in the pursuit of better environmental outcomes and as part of the push towards a net zero economy by 2030. Insurers are working alongside these businesses to support their efforts to achieve a clean, green future.
The circular economy is a business model through which manufacturers consider the whole of a product’s life cycle, or multiple life cycles, during design. The idea is to maximise a product’s use through recycling and refurbishing, to help reduce the use of natural resources.
AXA is one insurer that is becoming an active participant in the circular economy. It has said, “ourambition is to be the collaborative economy’s principal partner.”
To this end, since 2015 it has been the global insurance provider to the BlaBlaCar car sharing platform and it has subsequently provided cover to other businesses that are part of the sharing economy, including OuiCar, Uber and Deliveroo. AXA cites Ernst & Young research that indicates one shared car can replace between 9 and 13 individually owned vehicles as evidence to support its foray into this area.
The insurer says, “the circular economy offers an opportunity to insure new activities related to product disassembly, refurbishing and recycling, as well as to imagine new kinds of insurance to promote the circular economy.”
Insurance supports net zero
The insurance sector is also an important contributor to the move towards a net zero emission economy and the circular economy is part of that.
Eight leading insurance companies including AXA and Allianz have formed the Net Zero Insurance Alliance to work towards net zero greenhouse gas emissions by 2050. Insurance and reinsurance companies recognise they have an important part to play in achieving the transition to net zero emissions economies. Many have ratified the Paris agreement, which is an international climate change treaty to keep limit global warning to two degrees Celsius above pre-industrial temperatures.
“Insurers are playing a more active role providing cover for businesses that are part of the circular economy.”
Better environmental outcomes after disasters
Insurers are exploring other ways to achieve better environmental outcomes after a claim. Insurable events and natural disasters often involve significant damage to property. They increasingly want to make sure materials are disposed of in an environmentally-friendly way and recycled where possible.
An Insurance Council of Australia (ICA) spokesperson explains residential waste removal and disposal is a key part of the overall claim cost. “By working with suppliers across the claim supply chain, insurers can contribute to a broader level of decarbonisation beyond their own operational footprint.”
If you need to make a claim on your insurance policy, it’s important to contact your insurer who can provide guidance about safe and environmentally-friendly disposal of rubbish and other damaged goods. Your Steadfast broker can assist you through this process.