Insurance Post

Green machine

Insurance companies are increasingly considering the environmental impact of their businesses, but when it comes to IT equipment they often fear compromising competitiveness. Edward Murray talks to those who have made the jump without sacrificing the bottom line

The pros and CONS of train travel versus the car and their relative impact on the environment can be debated at length, but people will not act to reduce their carbon footprint until they genuinely think and live with the environment in mind.

The insurance industry has more to lose than most when it comes to the impact of climate change. Recent weeks have seen further flooding in the UK, following on from the deluges of 2007, while tropical storms have wreaked havoc further afield.

So, it would perhaps be fair to assume that insurance companies were among the most efficient IT users in the commercial sector, looking to minimise their impact on the environment and play their part in reducing the claims generated by today's changing weather patterns.

This does not seem to be the case, however, according to a recent study by Datamonitor. Following research conducted with 200 global insurers, analyst Jonathan Steiman says: "More than one-quarter of life insurers and one-fifth of non-life insurers do not consider environmental impact when making IT decisions. Conversely, only 13.3% and 7.5% of life and non-life insurers, respectively, chose the technology or strategy with the least environmental impact regardless of price or performance."

But is it realistic to expect insurers who are operating in a highly competitive environment to forgo commercial advantage and run the greenest IT systems possible?

Jem Eskenazi, chief information officer at Groupama, certainly believes there has to be a "balance between the business benefits and the environment". However, while insurers need to be mindful of their commercial activities when making these decisions, he is also quick to point out the huge strides that Groupama has made in this area, without having to sacrifice performance.

Environmental impact

Since 1990, Groupama has reduced its power consumption by 82%, according to Mr Eskenazi. In part this is due to the more efficient equipment being used. Since 2004 the company has replaced 1150 desktop computers, he says, and cut the number of printers from 344 to 114 less power-hungry ones. Elsewhere, the insurer makes significant efforts to recycle everything from paper to mobile phones, while its IT buildings in Croydon have been fitted with lights that automatically turn off after 10 minutes if they sense no movement in the room.

Unsurprisingly, Mr Eskenazi feels Groupama has made significant strides in developing a green approach to IT, although he still says business considerations must remain a part of the firm's thinking. What is important, he explains, is that neither business nor environmental considerations are ignored at the expense of each other: "The two can be combined."

This is a point that Mr Steiman is also keen to stress. Although it would be better if insurers simply adopted the greenest IT systems possible, the impact of such a move is nothing as compared to that created by the insurance industry's ability to underwrite and support new technologies and industries which in themselves provide answers to some of the environmental problems the world is facing.

Mr Steiman comments: "The benefits of having more hybrid vehicles on the road or the creation of more wind farms because of the availability of insurance should far outweigh the detriment of a 'non-green' IT strategy."

But, if a 'non-green' IT strategy is one in which environmental considerations are not elevated above everything else, then Groupama has clearly demonstrated that such a strategy can still deliver significant improvement in performance while reducing a firm's impact on the economy.

Mark Shreeve, chief executive of Angel Underwriting, says his firm takes a very serious approach to the environment, but also believes that it cannot be the only reason for investing in new equipment. He says it is imperative to consider performance, security, flexibility and reliability in any decision and to ignore this would be dangerous - if not suicidal - in such a competitive market.

Nonetheless, companies can still make significant changes to their impact on the environment. Angel Underwriting buys its electricity from renewable sources and, as such, pays a premium. Mr Shreeve says it is in the company's interests to have systems that run as efficiently as possible given the rising cost of power. As he comments: "The dramatic rise in prices does focus the mind significantly."

He also points to the work done by the firm on carbon offsetting. Between April and June of this year, it offset more than 75 tonnes of carbon, through a scheme run by Climate Care. If this is what a firm with 11 employees can do, what sort of impact could be achieved if the whole industry adopted a similar approach? "We are talking about very significant numbers," he says.

There is little doubt that the insurance industry does have its issues with legacy systems, mainframes and paper heavy processes. However, it is equally working hard to improve on these where possible and rationalise the IT systems in place.

Changing habits

But the biggest change it can effect is by encouraging people to change their habits through the policies it offers and support the development of green industries by making financial protection available to them.

Given the work that insurers have done to improve their own performance, and the work they are doing to help encourage others to change their habits, accusing them of ignoring the environment when it comes to IT is unfair.

Instead they should be applauded for their efforts and urged to continue the work they have undertaken, both in terms of getting their own houses in order and enabling others to change how they run theirs.

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