Folksam would like to see circular damage cover within the entire industry
The circular economy has come to parts of the insurance industry. The first to use circular damage cover was Folksam. Folksam now wants other insurance companies to join in and follow the trend.
In the picture: Karin Stenmar, sustainability manager at the Folksam Group. Photo: Folksam
“Three years ago, we became the first to use circular damage cover in Sweden. Now we can see that a couple of other insurance companies have begun to follow our lead. The industry is unavoidably heading in this direction, as more and more will hopefully see the incredible benefits of a circular economy”, says Karin Stenmar, sustainability manager at the Folksam Group.
Companies profit from reuse
In order for the planet’s resources to be managed effectively, it is essential to have an economy that is built upon a cyclical pattern. Three years ago, Folksam began to transform its claims system in order to both compensate, repair and resell people’s damaged goods.
Today, 90 percent of goods returned by its customers are given an extended service life.
In 2016 alone, this resulted in Folksam being able to benefit the environment by preventing 1.85 tonnes of waste and 1.10 tonnes of carbon dioxide emissions.
“So far, the insurance industry has only paid compensation for damaged devices, and then allowed the customers to dispose of the items themselves. But when we looked at a model for circular damage cover, we saw the opportunity to make incredible gains – not only for ourselves but also for our customers and the environment”, says Karin Stenmar, who continues:
“Therefore, we adopted a new model, by which we collect the goods from the customer, provide them with compensation, and repair the items with the help of our subcontractor GIAB, Godsinlösen.”
Increased customer satisfaction
According to Karin Stenmar, the greatest challenge has been the transformation of an entire systematic approach – an established manner in which the insurance industry has always worked. But this transformation has also generated results. Folksam’s customer satisfaction has increased, and the company has benefited from having a more honest damage cover without needing to raise premiums.
“The next step is to learn about more products and to ensure that recycling hubs are established throughout the entire country. The construction materials industry is a major cause of carbon dioxide emissions, so there is a need for a system that can process such materials. If we can demonstrate the financial benefit of circular damage cover, more and more insurance companies worldwide will join us in this work. We have a great responsibility”, concludes Karin Stenmar.
