Insurance Post

A sustainable future?

Solar power plant

Solar powered cities and hydrogen run transport systems might be close to reality than people realise. Christian Müller explains why insurers have an integral role to play in this world and must be at the forefront of embracing innovation.

Can you imagine living in a city powered only by solar energy, wind, biofuels and recycled organic matter? How about riding in a clean-fuel car that navigates itself or taking a public transport system that runs only on hydrogen fuel cells? Perhaps your rooftop will be covered in vegetation to provide natural insulation, fresh air and a higher quality water cycle. Or imagine you woke up tomorrow and everything in your house had its own IP address; your bathroom mirror, coffee cup, kitchen table, even your handbag or wallet? How would you react?

This may sound like some science fiction novel but mega trends such as population growth, energy demand, urban convergence and sustainability are forcing and challenging developers to find new and innovative uses of land, materials and operating systems. Go to any international computer trade fair and there is no getting around the new intelligence built into devices; image analysis; image recognition and observational interfaces, which are increasingly considered for future developments.

Embracing innovation
As cities plan for the future, they must tackle population growth, technological and behavioural changes, green design as well as mounting regulatory pressure. All this change means that companies and their insurers need to embrace innovation to play an integral role in building a sustainable future.

It should be borne in mind that we have been heading down this route already. After all, chip producers talk of fitting antennas to their products as standard, and when tiny computers are built into everyday items, then every object will soon be able to access the internet. The world will become one big hyperlink and the internet will increasingly take over our everyday life, not just at work, but at home and in our surroundings.

"The world will become one big hyperlink and the internet will increasingly take over our everyday life, not just at work, but at home and in our surroundings"

Population growth
Population growth plays a considerable role in the need to fit more and more people into very small spaces. Half the world's population currently lives in urban areas; yet these make up only 2% of the world's land according to the Massachusetts Institute of Technology. In addition, experts predict that by the year 2050, the global population will have increased by 50% from 1999.

As governments look for ways to adopt green construction codes they will be putting more pressure on the construction industry to change the ways buildings are designed, constructed and operated to incorporate green practices. Cities around the globe including San Francisco in the US, Dübendorf in Switzerland and several cities in China are planning to build these type of developments.

Green design
The current Swiss building design standard - ‘Minergie' for using natural healthy materials that offer high comfort combined with optimal energy efficiency - is beginning to be adopted or considered in other countries.

So how will future cities develop? Already local governments and municipalities are looking to establish carbon neutrality through initiatives such as zero waste management - a process which is already established in many European countries. This includes the composting of bio products used to enrich plantations within the city; materials such as glass and paper will be recycled closer to the city; and non-recyclable waste will be turned into zero emission waste by sending it to energy gasification power plants, a new burning system that is able to turn the gas created from these materials into energy.

"Half the world's population currently lives in urban areas; yet these make up only 2% of the world's land."New world


The need to reduce dependence upon air conditioning, a huge energy demand, is also being reviewed. Future cities will have more trees, lighter surface colours, an increase in water features and green spaces equalling at least 20% of the city's surface. This eliminates the ‘heat island' effect that is caused by large amounts of tarmac and asphalt - which can increase temperature in an urban area by several degrees.

Many predict that traditional cars and trucks can be eliminated within this type of sustainable development. Transportation systems based on electric and solar energy will complete the CO2 neutral system. Planning laws will change to encourage integrated business and residential zones. People will be encouraged to live closer to their workplace and telecommuting will become more familiar and accepted to reduce the amount of commuter travel. But future development will also result in changed behaviours.

Networking trends
Homes are already networked by technology through virtual networking. There is already access to information at all times but this increased reliance on data will bring new dangers. People are likely to rely heavily on technological information rather than human opinion. To put it plainly, consumers of the future will trust information obtained from their mobile phone more than an advisor. If they have any questions, they will ask their mobile phone. Again, this will impact where people live, how they shop and how goods and services will be delivered.

It takes a lot of valuable energy and materials to create and manufacture products, and the resulting industrial waste can be difficult to manage. Many cities and countries have put new laws into place to heavily tax companies that produce excess amounts of waste or create potentially harmful effects on the air and ecosystem.

"Consumers of the future will trust information obtained from their mobile phone more than an advisor."

Regulatory pressure
The extra taxes help to offset the environmental damage by going toward environmental restoration, protection and spreading information to increase knowledge on these issues. People and companies need to educate themselves about the environment. Smog alerts in many cases result from not only harmful transportation emissions but also from the output of factories into the air everyone breathes.

Taken as a whole, change in how cities are planned and built adds up to new and not yet contemplated risks. Companies must increase their flexibility, capability, knowledge and interest in innovation - not only for their own prosperity but to create and protect a sustainable future. In this, insurers have a deep an integral role to play and must also be at the forefront of embracing innovation.

Materials, sectors and technologies, will all come and go in the blink of the evolving needs of consumers and society. The old standards of long data sets and comfort in decades of experience will no longer apply. Close work with knowledgeable risk engineers, experts, designers, and innovators will lead insurers to take smart, calculated risks that spur and protect advancement.

Christian Müller is senior underwriter for International property construction in the insurance segment of XL Group

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