Swiss Re’s U.S. Solar Power Plant is One Part of Its Climate Change Commitment

Swiss Re’s solar power installation at its U.S. headquarters in Armonk, N.Y., a 2-megawatt facility expected to be up and running by late spring 2017, is just one part of a green theme that the carrier has been writing for itself over several years.

Work began in October on the power plant, which will occupy roughly 10 acres of land on Swiss Re’s property. It is expected to generate 60 percent of the power required by the 700-plus employees working there.

One of those employees is Megan Linkin, the company’s natural hazards expert, who spoke to Insurance Journal on behalf of the carrier about its commitment to the environment.

“The company definitely practices what it preaches,” Linkin said. “We’ve acknowledged that climate change poses a significant risk to our society.”

Swiss Re Americas President and CEO Eric Smith in a statement said that the power plant “honors our brand and is what we are all about.”

“Our mission is to make the world more resilient and a big part of that is helping society protect against natural catastrophes,” his statement reads. “It is sustainable projects like this that demonstrate this commitment to making a difference.”

The solar facility is in keeping with the company’s participation in RE100, a global collaborative initiative of businesses committed to 100 percent renewable electricity and working to increase renewable energy demand and delivery.

Swiss Re helped form the initiative, which was launched during Climate Week NYC in 2014.

Swiss Re's 2-megawatt solar power installation at its U.S. headquarters in Armonk, N.Y. is slated to open in spring 2017.

Swiss Re’s 2-megawatt solar power installation at its U.S. headquarters in Armonk, N.Y. is slated to open in spring 2017.

The carrier’s efforts to be green have garnered it recent recognition. It was called out in an annual report by sustainability leadership advocate Ceres that assessed insurer disclosures on climate change risks.

The report, “Insurer Climate Risk Disclosure Survey Report and Scorecard,” evaluated the quality of responses from insurance companies in the annual National Association of Insurance Commissioners Climate Risk Disclosure Survey.

Only 22 of all insurers studied earned the “High Quality” rating. One of those was Swiss Re.

Another of the carrier’s initiatives focuses on closing the protection gap.

Linkin described this as a “multifaceted approach to try and increase insurance penetration throughout the world.”

The approach includes:

  • Diversifying its product offering – such as creating parametric products – to provide more options to consumers in hopes of spurring interest in purchasing insurance to increase financial resilience after a natural disaster;
  • Working with microfinance and micro-lending institutions in low-income economies to offer solutions to the poorest individuals, and increase the financial resilience of that population;
  • Expanding its target clients to include the public sector.

“We are the first reinsurer to put together a team that focuses exclusively on the public sector,” she said.

It’s “Global Partnerships” team consists of 35 individuals located globally, with members in the U.S., Mexico, Switzerland, China, Singapore, India and England.

The sole purpose of the team is developing insurance products to address the needs of the public sector, which Linkin believes is facing the prospect of taking an even bigger role in footing the bill after a natural disaster than it already does.

The rate of growth of total losses has outpaced the growth of insured losses over the last 35 years, according to Swiss Re’s annual Sigma report issued earlier this year.

In 2015, the global protection gap was USD $55 billion. In terms of 10-year rolling averages, insured losses grew at 10 percent between 1979 and 2015, and total losses by 10.4 percent, the report shows.

“If those losses aren’t picked up by the private insurance market, those losses are going to have to be picked up by the government,” Linkin said.

Beyond creating new products, Swiss Re played a part in addressing the needs of the public sector when it contributed to a climate change adaption report commissioned by the city of New York and released in June 2013 in the wake of Superstorm Sandy.

The city applied Swiss Re’s natural catastrophe models to NYC to shine a light on the potential impacts of wind and storm surge on the city assuming a world of rising sea levels and more intense storms.

The city and Swiss Re combined three sets of inputs:

  • Hurricane models: Swiss Re uses data from the National Hurricane Center that includes nearly 1,200 observed tropical storms and hurricanes in the Atlantic Basin between 1851 and 2008. The model then “tweaks” each of these historical storms hundreds of times to create more than 200,000 storms that could form in the area, and then uses established models for atmospheric pressure, speed, size, and angle of landfall to assess the resulting storm surge and wind fields.
  • Climate change scenarios: The city provided Swiss Re with guidance on projected sea level rise in the 2020s and 2050s, based on work of the New York Panel on Climate Change, and instructed the company to assume of a sea level rise by the 2020s and the 2050s based on those projections.
  • City-level asset and economic activity: Consultants worked with city agencies to develop a working model of asset value divided into several categories, including buildings, transportation, telecommunications and utilities. These values were further broken down by ZIP code, as was the city’s economic activity.

An overview in the report states: “In setting out to define plans for strengthening New York City’s resiliency to climate change, it was critical to anchor the development of those strategies in the best possible understanding of the magnitude of the risks facing New York – including its infrastructure and its neighborhoods.”

Linkin said studies like this help government put a price tag on what climate change can potentially cost them in the future and how much they can save if they initiate resiliency measures now.

The green theme is found within the company as well.

Employees are incentivized to make environmentally friendly changes to their homes though subsidies to purchase energy efficient appliances or energy efficient windows. And there are incentives for purchasing bicycles, or incentives to purchase an electric or hybrid car, depending on the area.

“It really gives me a sense of pride,” Linkin said. “Because I am a scientist and because I study climate change, I want to work for a firm that has the same ideas I do, and cares about science, and the environment and the planet.”

Editor’s note: This is the final in a series of columns looking at carriers that are recognized as green. The first piece focused on The Hartford and the second on Zurich.


Washington Commissioner Deems Zenefits’ Free Software Offer Illegal

Washington Insurance Commissioner Mike Kreidler ordered Zenefits to cease free distribution of its employee benefits software, saying the tactic violates state insurance law against inducements.

Washington is the first state to take action against the company for violating inducement laws, according to Kreidler.

Under an agreement with Kreidler, Zenefits can challenge the order within 90 days.

California-based Zenefits began operations in Washington in 2014, selling online human resources services to businesses.

As part of its free software offer, Zenefits provided certain features with a paid commission. To access these premium features, the company required the client to designate Zenefits as its broker of record, then collected the commissions associated with the insurance product sold.

Washington Insurance Commissioner Mike Kreidler

Washington Insurance Commissioner Mike Kreidler

“The inducement law in Washington is clear,” Kreidler said. “Everyone has to play by the same rules.”

The law permits a licensed producer to offer no more than $100 per person during a consecutive period of 12 months.

Zenefits markets software’s value at $29,100 to $45,000 per year. The company will determine what fee to charge its Washington customers starting Jan. 1, 2017, in accordance with the order.

Zenefits said on its website it will charge all Washington state customers $5 per employee per month for it core HR product.

A statement on the company’s site reads:

“This agreement arises from OIC’s interpretation of its anti-rebating statute, which prohibits brokers from refunding part of their commission back to clients. These anti-rebating statutes are designed to protect consumers from discriminatory pricing.  Unfortunately, the Washington commissioner seeks to use a consumer protection statute to raise prices for Washington consumers, a counter-intuitive decision that we disagree with.”

Kreidler also fined Zenefits $100,000 in October 2016 for employing unlicensed producers to sell insurance in Washington. The company allowed unlicensed employees to complete 179 insurance transactions between Jan. 1, 2014 and Nov. 30, 2015, according to the commissioner’s office.

Washington is among a handful of states, most recently California, to fine Zenefits for allowing unlicensed producers to sell insurance.

California Insurance Commissioner Dave Jones this week levied $7 million in penalties against online benefits broker Zenefits for multiple license violations. However, that settlement provides that half of the total $7 million in monetary penalties are suspended due to remedial actions by Zenefits.

Both Washington actions resulted from a two-year investigation of Zenefits by Kreidler’s office.

Kreidler’s investigation also found that Zenefits offered individual clients up to $2,000 in cash for referring companies through a program called “Friends with Zenefits,” that Zenefits paid at least one individual $250 for two referrals and that at least 25 state residents chose Zenefits as thier insurance broker after a demonstration of the company’s software.


Louisiana LGBT Anti-Discrimination Dispute Awaits Judge’s Ruling

Lawyers for Louisiana’s governor and attorney general clashed in court on Nov. 29, in a struggle about the limits of the statewide elected officials’ authority and Gov. John Bel Edwards’ executive order aimed at protecting LGBT rights.

Baton Rouge Judge Todd Hernandez heard a full day of witness testimony and legal arguments in the latest in a series of disputes between the Democratic Gov. Edwards and Republican Attorney General Jeff Landry.

But the state district court judge didn’t rule on Landry’s request to block Edwards from enforcing his executive order prohibiting discrimination in government and state contracts based on sexual orientation and gender identity. He also didn’t rule on Edwards’ request to spell out the boundaries of the attorney general’s authority.

Instead, Hernandez asked for follow-up written arguments by Dec. 2 and said he’d make a decision quickly thereafter.

“There’s an awful lot of testimonial evidence submitted to the court to decipher,” he said.

Edwards says his LGBT-rights protection order, issued in April with an exception for contractors that are religious organizations, is a statement that Louisiana doesn’t discriminate.

Landry, seen as a possible challenger to Edwards in the 2019 governor’s race, calls the order executive overreach — arguing it’s unconstitutional because it seeks to establish a new protected class of people that doesn’t exist in law and that lawmakers refused to add.

The attorney general has stalled legal contracts that contain the anti-discrimination language, a move the governor says exceeds Landry’s authority.

Scott Johnson, general counsel for Edwards’ Division of Administration, estimated up to 100 contracts for state agencies and boards to pay outside lawyers are in dispute, leaving the entities either unable to compensate lawyers doing the work or unable to hire the lawyers at all.

“There’s a lot of anxiety out there,” testified Rick McGimsey, another top lawyer in the Division of Administration. “It’s been a daily issue.”

House Appropriations Chairman Cameron Henry, R-Metairie, who supports Landry’s position, described his committee’s refusal to approve health insurance contracts for 10,000 state employees, retirees and family members that contained the anti-discrimination language. Henry said he believes the governor is “trying to create law through executive order.”

But even if the judge rules the anti-discrimination order is constitutional, Henry told Edwards lawyer Matthew Block that won’t change his vote against the contracts if they contain the LGBT-rights language.

No objections about the anti-discrimination language have been lodged from agencies or vendors outside of Landry’s office, Johnson said.

“There’s no reason that anybody would come to you to complain about the executive order,” replied Elizabeth Murrill, an attorney for Landry. “You didn’t issue the executive order.”

Lawyers for the governor and the attorney general traded accusations about who was at fault for the held-up contracts, why $18 million hadn’t been transferred from an agency overseen by Edwards to Landry’s office and why Landry wanted to pay one lawyer a rate well above the maximum rate typically paid to contract attorneys.

Landry’s office said the only language at issue with Edwards’ executive order is the term “gender identity,” a provision that protects transgender people. The attorney general’s office argued the term isn’t defined and could create legal problems and ambiguity for employers.

Block detailed other contracts that have been approved by the attorney general’s office that include language complying with a federal executive order barring discrimination based on gender identity. He also said the attorney general’s office has refused to sign off on some contracts that contain anti-discrimination language based on sexual orientation.

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