While circularity — or, more politely speaking in the manner of renovation and updating for a second life before re-entering into good production processes— has evolved as an enticing concept to counter our entrenched linear design over the last few years. It entails changes in everything from business models and practices to technology as we know it. For that, a vital role will be played by global insurance providers to ensure businesses can transition from linear models over towards the circular economy.
Circular Economy Explained
The premise of a Circular Economy is to decrease waste and get additional use out of that which has already been utilised. Circular economy is more than just resource use, well beyond the traditional linear make-use-discard system in its ambition to address pivotal environmental streamlining impacts or transformative innovation opportunities that facilitate economic growth.
Circular Economy Insurance
Historically, insurance has been a notable pain-point use case for how this approach might pair with financial protection against those losses: identifying and reducing (two sides of the same coin) risks. The circular economy sits at the core of insurance, where new liability scenarios and opportunities that arise from embracing sustainable business models are being evaluated by companies.
Assets Longevity and Output:
Longer life(?)One of the benefits (or disadvantages, depending how you slice it) is that C. Economy models focus more on longer use and repair as opposed to recycle(and should really be in C. Economy? As an example, insurers may underwrite policies specifically intended to be sold against high margin products (extended warranties or maintenance services) with anticipated lifecycles of more than 10 years. This trend has been driving business to develop more permanent and reliable solutions, thus allowing providers offer better guarantees at the dismay of a higher price they can charge over their longer life under operation.
Product as a Service (PaaS):
It will complement to product as a service trend and the move away from ownership so it creates new risk vectors around how products are used, maintained or quality implications related to liability. This is one of the main reasons why insurers could then insure this risk and provides confidence to companies opting for a PaaS model. Broadband package offering shared ownership insurance, pay as you go pricing and performance guarantees over time.
Renewing Our Recycled Goods
Recycling and resource Recovery are key building blocks of the nasty old linear economy but its enablers around contamination have serious baggage — fobbing off sales only means lower price or worse, like catching cooties; incentivising retail store volume growth on packaging deposit return makes it likely to flood out downstream processing capacity leading most of them poor chaps in operational hazards while potentially extending minimum pass-through prices for recyclable commodities.
In the recycling and resource recovery industries, insurance companies have pinpointed specific risks in which they finance appropriately wary sum authorizing to remain insured dealing with certain losses that would other simply be enough to discontinue their operation altogether — but not all. De-risking of advanced recycling technologies investments can be supported by insurers.
Supply Chain Resilience:
These models often create more and better connected supply chains involving a multitude of stakeholders in sharing assets as part of re-use, refurbishment or recycling activities. Magnitude of insurance business tend to avoid extraction, roaming and change can also cause stock movement supply chain disruption may risks manage. simplicity reduction in circular economy, enhancing the resilience of supply chains whilst maintaining materials and goods at constant useful availability streams.
Innovation and Startups:
By backing new green start-ups and their innovative technology or business ideas, the transition to a circular economy could in this way feature as an engine for innovation. But then again, these experiments are more hazardous because of unclear solution methodologies and concepts The insurance industry can also support by forming tailor-made new insurance propositions designed for start-ups participating in the circular economy — providing them with a platform to access finance, scale their business and turn ideas into reality.
Environmental and Regulatory Compliance.
The study suggests that if indeed governments are starting to use policy instruments effectively, companies would also need to prove their compliance with regard the exeisting legislation / standards for sustainability and circularity. EcoExcess is able to offer Eco-Earth policyholders coverage for fines and penalties, defense costs and environmental exposure. 0:00 [INSURANCE AS A SUSTAINABILITY ENABLER] IAN MUTAMBA Sitting premium Posted With the insurance industry identifying circular economy behaviours to reduce chances of risk occurrence and broadcasting lower premiums on them for interested corporations, it may become a driver to sustainability.
The birth of a new insurance reality in the Circular Economy
As more companies adopt, the circular economy will also demand insurance solutions that cater to covering (or insuring) those transacting in and around these nascent business models. Several new insurance solutions the designing of, engagement to other stakeholders and using data & technology all incentives along side earlier risk identification drove smarter risk mitigation.
Insurers can also play a part by supporting the circular economy with their investments. If insurers unMinutes part I, ) while driving environmental gains (HSBC Welled to channel capital towards businesses and projects that embody the spirit of a circular economy they can not only help stimulate society30; Part II () Table III| in which we score 5) but have access non-traditional income streams too.
In general insurance, as an industry with high exposure to many risks in the world and most far-reaching global investors, we have a first lever of control enabling insurers globally incentivise circular economy through creating new risknmanagement solutions /financial products. For global businesses, the move to a regenerative economy means that our connections between insurers and company clients will need to be tighter than ever.
