Climates are under extreme pressure. As a contributor of carbon emissions, the automotive aftermarket must take steps to curb its contributions and sow the seeds for a sustainable industry. Solera has stepped up to the challenge.
As Bill Brower, Solera’s senior vice president of global industry relations and North American claims sales, points out, auto insurance premiums have increased up to 25 percent over the last year. These increases are largely driven by increased auto collisions, higher labour costs, parts shortages and increased used vehicle prices, to name a few factors.
Combine the current cost of repair with public opinion around sustainability and it’s clear the collision claims industry needs to be on board with environmental initiatives. A 2023 PWC survey states 77 percent of consumers are willing to pay more for recycled, sustainable or eco-friendly products. A global Solera survey found 75 percent of consumers would switch to an insurer that could prove its sustainability credentials. It’s time to take a look at how your business can achieve a more sustainable claims process.
DATA
Effective sustainability initiatives hinge on data literacy and analytics. Reducing your carbon emissions won’t be possible if you don’t understand them in the first place.
Insurers seeking to bring down premiums to attract and retain customers while simultaneously supporting their sustainability initiatives should consider data-driven solutions. Diligent data tracking is the first step in analyzing where you can reduce and offset your business’ carbon emissions.
Under the Global Greenhouse Gas (GHG) protocol standard, there are three scopes of emissions. Scope one includes direct emissions owned or controlled by the organization; scope two includes indirect emissions, from the generation of energy purchased to fuel, heat and cool the organization’s operations. Scope three is the most difficult to track, as it includes indirect emissions occurring in an organization’s value chain—for example, for insurers: emissions produced by policyholders’ vehicle repairs.
To aid in this important step, Solera has developed a unique algorithm within the auto claims industry to analyze and support businesses to reduce the carbon emissions of the claims process managed by the insurer.
REPAIR OVER REPLACE
Car insurers are focused on repairs as they seek to reduce emissions in their supply chains. Greener repairs offer rich potential in improving sustainability. Traditionally, the default choice has been to simply fit new parts; but for common problems like damaged bumpers, carrying out repairs or installing used parts is more environmentally sound. Omitting new parts when repairable means less carbon-emitting production, and reusing green recycled parts prevents them from going to landfills.
To paint a picture: it takes 500 years for a plastic car bumper to break down in landfill. Choosing to repair rather than replace 11 front bumpers can result in a -236kg carbon emissions reduction, which is equal to four tree seedlings grown over 10 years.
Further, Simplicity Car Care CEO Paul Prochilo maintains that repairing or refurbishing parts can lead to an 85 percent emissions reduction. The use of green recycled parts over new parts reduces emissions output by approximately 47 percent, he says.
Solera’s global data finds two-thirds (67 percent) of drivers surveyed are comfortable with used parts, citing guarantee (57 percent) and cost (46 percent) as a driver toward used parts. As such, Solera suggests insurers consider offering competitive premiums for policies that prioritize repairs and green parts.
