Green building owners and/or green building property managers are often are unaware that insurance premium discounts of between 25%-40% can be applied to their green building insurance policy.  That is a tremendous savings that insurance agents and brokers are hesitant to disclose as it reduces commission. 

Insurance Companies such as Fireman's Fund Insurance Company automatically apply a 5% discount to green building insurance policies.  This discount recognizes the reduction in risk due to the features of a green building.  In addition, insurance company underwriters have authority to lower premium by applying individual risk premium modification discounts (IRPM).  Newer contstruction, effective property maintenance, management experience and quality of building materials are examples of IRPM discount categories.  Given such criteria, virtually all green buildings are eligible for IRPM discounts.

At Green Business Insurance, Inc. we work to make all transactions transparent between policyholder and insurance company.  Our clients receive all premium discounts that have been earned to ensure the premium paid is a reflection of the risk taken by the insurance company.

Going green is big business.  It is estimated that consumers will spend $500 billion on green products and services over the next year.  While consumers should continue to try to reduce their carbon footprint, evaluate the risks associated with being green.

• While quality green construction products increase energy efficiency they can present an increase fire hazard or can be combustible.  Green paint, insulating materials and natural flooring can increase exposure.  Reducing the severity of the exposure can be accomplished by installing an automatic sprinkler system.
• When installing a vegetative roof understand the dimensions and slope of the existing roof, maintenance requirements involved and the impact the vegetative roof may have on other utilities in the building.  Consider potential allergic reactions of employees as vegetative roofing may impact air quality.
• When hiring a contractor, make sure each has experience installing green building materials and hire qualified employees and subcontractors to do the work.  Request that each contractor provide certification that proves qualification. 
• Inquire with manufacturers of green office furniture to make sure the product does not emit gases that may impact air quality.

Constructing a green building or renovating an existing building to increase efficiency is a smart decision for commercial building owners.  Before construction begins, however, construcion materials should be researched. 

New green building materials are constantly being introduced to the market.  Often the products are so new and "high-tech" they are not UL listed or Factory Mutual approved.  In addition, green building materials may not be well tested.  Conditions surrounding a project will determine if the materials should be used considering issues such as temperature, moisture and wind patterns.  Keep in mind green building materials may not be available in certain quantities so delivery expectations should also be considered.

While under construction, quality control of your green building project should be constantly evaluated.  Contractors can somewhat unfamiliar with new, green building materials.  Before, application, communicate to each contractor the recommended installation procedures.

Pat Thompson, CPCU
Green Business Insurance, Inc.

Insurance companies that offer green insurance coverage through Green Business Insurance should consider implementing a dividend plan - returning a portion of paid premium to the policyholder if the green policyholders, over-all, have low loss ratio.

Green Business Insurance Dividend Plan

• In order for Green Business Insurance to pay dividend to green policyholders, total combined green premiums must be over $2 million
• In order for Green Business Insurance to pay dividend to green policyholders, combined loss ratio for green policyholders cannot exceed 85% for all lines of green insurance business
• In order for policyholder to receive green dividend check their individual loss ratio cannot exceed 85% during the policy year
• Green Business Insurance policyholders will receive a dividend check of up to 5% of prior year paid premium if the total group loss ratio is below 85% and their individual loss ratio is below 85%

The figures above are not exact but the concept should be considered. 

As the United States economy evolves toward sustainability, I am convinced that climate change litigation will be a concern for businesses and risk managers. 

Below I have listed a few examples of potential liability exposures facing insureds:

Directors & Officers face considerable exposure from stockholders and outsiders who believe company leadership have not taken sufficient measures to reduce the company's carbon footprint. 

Architects & Engineers that design green buildings could be sued if the building they designed does not sufficiently reduce carbon emissions.

Contractors that construct green buildings could also be sued if the constructed building does not sufficiently reduce carbon emissions as projected.

Technology Firms hired to design energy efficient computer systems could be sued if the system is not as energy efficient as their client was lead to believe.

Insurance Agents could face errors and omissions claims if policyholders do not have proper coverage related to green liability claims.

It is in the best interest of all businesses to evaluate their exposure to potential liability claims associated with sustainability.

After twenty-years of working in the insurance industry, I can't tell you how many times insurance companies have told me "we want to insure businesses that are safety conscious, promote responsibility to employees and businesses that are growing."  For the past six months I have spent considerable time consulting with insurance companies on how to find such business-sell insurance to green businesses.

Underwriting managers and marketing managers of property and casualty insurance companies and health insurance companies are neglecting the most "careful" and potentially profitable businesses in the marketplace-green businesses.  The genuine concern that responsible businesses and green businesses demonstrate toward the environment translates very will to the insurance industry.  Strict quality control, careful employee screening and superior property maintenance are just of few of the characteristics green businesses consistently demonstrate and are characteristics insurance carriers find highly desirable.

As I meet with insurance company executives and recommend they research the green business landscape as a prespective niche for their insurance company, I get a lot of "blank-stares".  However, once the concept is understood from an insurance company underwriting perspective, there is considerable interest.  As Green Business Insurance grows, we hope to leave our mark on the insurance industry by promoting green businesses as responsible stewads of the environment deserving of lower-cost insurance.

Pat Thompson, CPCU is President of Green Business Insurance, Inc., an independent insurance agency focusing soley on insuring green businesses.  A twenty-year insurance industry veteran, Mr. Thompson has considerable experience designing insurance programs for domestic and international businesses while also consulting with insurance companies on green insurance.  Mr. Thompson can be reached at 614-562-5881 or by email pt@greenbusinessinsurance.com.

At Green Business Insurance, not only do we focus on offering the best insurance rates available for green businesses but we are also creating innovative green policy language.  After a claim has occurred, business owners and employees are in a highly stressful situation.  Customer and employee retention, work location, inventory and computer network repair are just a few, of many matters that need to be evaluated to get the business moving toward pre-loss productivity. 

Green Business Insurance is an industry leader in developing insurance coverage is tailored to meet the needs of a green businesses.  One example of our unique offerings is Green Consultant Coverage.  This is a one-of-a-kind policy benefit that will soon be available when approved by state insurance departments throughout the United States.  After a claim, the policyholder will receive up to ten hours of free advice from a green consultant who will recommend using the most efficient power sources and office equipment, organic building materials, recycled building materials and organizing the office in a manner that promotes a green office environment.  No other policy offers this benefit!

We look forward to continued focus on improving the insurance protection for green businesses! 

Green Business Insurance, Inc. is focused on providing lower-priced property and casualty insurance to green business.  In order to earn lower rates the insurance applicant must be green certified.  In the past Green Business Insurance has required green certification by a third party.  Effective June 1. 2008 Green Business Insurance, Inc. will make available their own green certification that ties green certification and corporate responsibility/risk management.  Third party certification is viewed as a barrier for many prospective clients.  Offering our own green certification process will eliminate that cost and barrier.