Businesses are increasingly adding sustainable features to property, as the nation shifts towards net zero.

With concern around climate change growing, and energy security and affordability issues coming to the fore, companies are looking to tap renewable energy sources, implement efficient systems, and utilise green building materials.

But adding technology such as solar panels or Electric Vehicle (EV) charging stations can potentially change the risk profile of a property, resulting in insurance implications.

Insurer Zurich says it encourages clients to make such changes, but also helps them understand and mitigate any challenges that may arise.

“Many clients are recognising the importance of sustainability in reducing their environmental impact and operating costs,” Evan Moore, Head of Property, Marine and Technical Lines, Zurich Australia & New Zealand, says.

“It’s important that we, as an industry, do everything we can to support a sustainable transition to a net-zero world.”

Mr Moore explains it’s important that clients consider all elements associated with embedding such technology, including associated costs, long-term benefits, and any risks that should be mitigated. 

EV charging stations and solar panels can potentially add to fire risk, and solar panels can place additional weight on roof structures and are highly exposed to weather perils.

"Most underwriters have experienced some level of loss driven by changing technologies in a customer’s building. The inherent risk of fire is increasing with the pace that these technologies are being developed, which makes mitigating any risk through the correct measures critical.”

That’s not to say that the risks should put clients off improving the sustainability of their property. But proper planning, communication and mitigation is vital.

“Communication and collaboration across all stakeholders of a building is crucial to ensure successful implementation,” Mr Moore says.

“Zurich is committed to this change for our customers but what is really important is the consideration of risk mitigation at the point of design.”

Another concern for clients is that the enhancements may result in higher premiums.

But Zurich says early engagement with insurers can enable a smooth transition, as opposed to last-minute changes, which can potentially significantly impact underwriter appetite.

Ensuring risk has been considered by implementing the right measures is therefore very important.

Such measures include clear separation between new technology and combustible materials, fire-fighting plans, suppression systems in areas not previously considered high risk, and enhanced maintenance of electrical systems.

Mervyn Rea, Head of Zurich Resilience Solutions, Australia & New Zealand, says making sustainable improvements doesn’t need to result in higher premiums.

“Insurance premiums are quite simple – they are linked to risk quality,” he says.

“So the better the risk, the less chance of higher premiums. Early engagement is key to ensure everyone – customer, broker and insurer – are informed and able to work through the solution to maximise the benefit everyone wants to achieve.”

Mr Rea says Zurich’s team of 20 risk engineers in Australia (part of a global network of 850) provides a wealth of expertise around new technology and sustainability.

“We can provide timely advice early in the stages of change, from reviewing construction plans before the first sod is cut, to helping customers determine the most fit-for-purpose Electric Vehicles in their fleet,” he says.

“While these forms of advice are focused on the customers’ attempts to reduce their impact on the environment, our Climate Resilience service also helps the customer understand and reduce the impact the environment has on them and their business.”

Zurich says the principles around forward-planning, risk mitigation and communication apply to all property changes – not just those focused on sustainability.

“Any modification, whether it be for sustainable reasons or not, can introduce new, unknown risks,” Mr Rea says.

“We often know what these new risks are, and can advise on how to best manage them, or replace with alternatives. Our risk engineers help ‘engineer-out’ those risks.”