Mojtaba Ghodsi: Circular thinking – a revolution within damage cover

Each year, the average person in Europe consumes between ten and twenty tonnes of resources. This figure really needs to be as low as three tonnes, according to Peter Hopkinson, professor of innovation and environmental strategy at the UK’s Bradford University. For more and more people, it is becoming increasingly apparent that our consumption of energy and materials cannot continue at the current rate. The prices of various raw materials have increased rapidly. In certain industries, the cost of materials now constitutes up to 40-50 percent of production costs. Above all, however, we are seeing dramatically increasing costs for society in terms of our impact on the climate and environment.

The insurance industry is already feeling the effects of climate change

At Folksam, we regard climate change as a threat to the underlying principle of insurability and the opportunity for our customers to live in a secure and sustainable world. An increase in climate-related claims will ultimately result in it being too expensive to take out insurance policies. Climate issues are, therefore, of crucial importance to our industry.

We engage with the concerns of our customers by taking a practical approach to working with environmental and sustainability issues. For Folksam, the employment of circular thinking when working with damage cover is central to our efforts to minimise our customers’ consumption of energy and materials. In addition, it also makes commercial sense and drives our levels of customer satisfaction.

A new concept within damage cover

We currently have agreements with 3,000 companies in the automotive and construction industries which repair damage using environmentally approved and reused material. In 2015, Folksam launched a pilot partnership with the environmental technology company Godsinlösen, and this has been incredibly successful. Previously, most of our customers submitting claims for damaged mobile phones would receive a monetary payment so that they could purchase a new one. Now, however, the broken telephones are sent to Godsinlösen and are repaired. Since the beginning of the year, our collaboration with Godsinlösen has been expanded and the arrangement is now being used throughout the whole of Folksam. This involves approximately 20,000 devices per year – and this is just counting mobile phones – which will be processed by means of reuse; this amounts to an environmental saving of fully 60 kg of carbon dioxide emissions per device.

Since 2015, in addition to the repairing of mobile telephones, Folksam has also begun to take in other damaged items, which will be reused or, if this is not possible, recycled. In this area, too, we can see significant savings – for example, with regard to reduced carbon dioxide emissions.

Beneficial to both the customer and the environment

From Folksam’s commercial perspective, this arrangement is entirely rational. It results in lower costs and, in the longer term, lower insurance premiums. The time spent processing claims is also considerably shorter. Most importantly for us, however, it means a reduction of our environmental impact. It is also important to remember that Folksam is owned by our customers. This means that the savings generated by Folksam in conjunction with this approach will ultimately be passed on to our customers – we don’t have to contend with shareholders demanding the payment of dividends.

When we talk to our customers, the overwhelming response is that they are incredibly appreciative of our work to counteract today’s throwaway culture. There are, of course, those customers who are disappointed that they are not given money to buy a new telephone. But this will always be the case – it is not possible to inspire a revolution and to take a pioneering approach without somebody being disappointed.

Source: The Haga Initiative