Sustainability set to influence property claims decisions

Insurers could soon face increased regulatory as well as investor scrutiny over how property claims are handled, as improving emissions data brings sustainability considerations into day-to-day repair decisions, says strategic data analytics and technology business Verisk.

The shift comes as regulators and investors place growing emphasis on the quality and consistency of sustainability data. The Financial Conduct Authority’s latest consultation on disclosure requirements is designed to ensure firms provide clear and comparable information on climate-related risks and impacts, with the outcome expected later this year.

Investor expectations are also intensifying, with PWC suggesting that around 75% of investors now prioritise ESG considerations in a company’s strategy. This reinforces the need for credible and auditable data on how firms operate in practice.

While the FCA’s proposals focus on corporate reporting, they are likely to increase scrutiny of the underlying data that supports those disclosures. In practice, that could bring greater focus to operational areas such as claims supply chains, where firms may need to evidence how outcomes are delivered.

Analysis from Verisk suggests that once emissions data is available at a more granular level, it has the potential to influence claims decisions directly, including choices around repair methods, material selection and supply chain specification. The data highlights just how material those differences can be. For example, softwood trims can produce as little as 24% of the emissions of MDF, while hardwood alternatives can also deliver reductions of close to 50%. Similar patterns are seen when using lime render which produces around 5–8kg of CO₂ per square metre, compared to12–15kg for traditional cement render, while also offering a longer lifespan.

Although lower-carbon alternatives can involve higher upfront costs, in some cases 25–50% more than standard materials, they can offer improved durability and reduce the likelihood of future repairs.

Ben Blain, Head of Property at Verisk, said: “Once you can measure something, it inevitably starts to influence decision-making, and that’s what we are beginning to see with carbon in property claims. What the data shows is that relatively small choices, such as the materials used in a repair, can have a meaningful impact on emissions.

“As expectations around sustainability data increase, insurers could come under greater pressure to evidence how claims are being handled in practice. That doesn’t necessarily change the outcome for the customer, but it may shape how the repair is carried out.

“Over time, we would expect carbon to become one of a number of factors considered alongside cost, speed and quality when managing property claims.”