Tower introduces sustainability benefit for policyholders

Tower introduces sustainability benefit for policyholders | Insurance Business New Zealand

Tower introduces sustainability benefit for policyholders

Tower Insurance recently changed how it supports customers dealing with a total loss on their home from weather events, fires and floods, and is now offering a payment of $15,000 to incentivise them to use more sustainable materials in their rebuilds.

The $15,000 payment will be made on top of Tower’s usual policy payout, and is intended to cover the costs of sustainable building materials and eco-friendly features for new homes, such as natural paints, solar panels and water efficient taps.

Tower Insurance chief executive officer Blair Turnbull noted that the effects of climate change have resulted in more frequent and severe weather events across the country, and this means that Kiwi homes are facing an increase in risks. He said the benefit intended to make a “meaningful contribution towards building a sustainable future for New Zealanders”, and to help build healthier and more resilient homes.

Chief underwriting officer Ron Mudaliar said that Tower had been looking at the overall issue of climate change over the past several years, and has been discussing opportunities to incorporate environmentally friendly practices into its product base. He said the new benefit would incentivise customers to think sustainably when building, and noted that the current cap of $15,000 would be reviewed on an ongoing basis.

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“We’ve really been looking at the broader issue of climate change within Tower, and we are doing an audit on ourselves as an organisation to see what our carbon emissions are looking like,” Mudaliar said.

“We want to do that work, understand what it means for us, and come back with some results and solutions. But we’re also looking at what we can do for our customers in the meantime from a product perspective, and one of the opportunities we had was to look at our home insurance policies, because that’s where our customers actually see a lot of pain when it comes to large losses.”

“Having reviewed that, we thought we should add a benefit that would allow those customers to make a choice where they can improve the quality of their life, but also have a positive impact on the environment,” he explained.

“The sustainability benefit was something that we were looking at for a while, and there are some other organisations that already have it, so we saw this as a good opportunity to be able to offer it to our clients as well.

“It’s an offer across all of our home insurance products, so it’s not just a premium offer either. We’ve put a maximum of $15,000 on it at the moment, but we will review that as we constantly review all of our products.”

Mudaliar said that Tower would support any eco-friendly options that customers want to incorporate, and will cover the costs at the time of the rebuild. The benefit came into effect on August 27 and applies to all new business, along with renewals for existing customers.

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He noted that while many of the houses damaged in the recent Auckland and South Island storm events wouldn’t necessarily be total losses, the benefit would nonetheless be available to any existing customer that renews their policy.

“The payment essentially covers you for anything additional you want to do on your new home,” Mudaliar said.

“If you want to put in new eco-panes, add solar panels, or add increased insulation - we will look at any of those kinds of opportunities that the customer comes across at the time of the total loss, and cover that. There is no additional cost, so you don’t have to buy this benefit. It is automatically included in your house policy.”

“Some of the claims that came in from the weather events this year will be for fairly small losses, and not all houses there will be facing a total loss,” he added.

“However, the benefit will apply on renewal for anybody after August 27, and that includes our existing customer base. It is there for them to use if they need it.”

Mike Burrell, executive director of the Sustainable Business Council said that energy efficiency and carbon footprint should be ‘core considerations’ in all homebuilding activity, but costs can be a hurdle.

“Rebuilding homes more sustainably will result in people living in warmer, drier, and healthier homes that generate lower emissions and are easier to heat and cool,” Burrell said.

“But we know that there is always a cost consideration for New Zealand when building or rebuilding properties, so any incentives from the private sector is a very welcome move.”