Allstate's work on addressing climate risk and building resilience is helping the company evolve from a traditional insurance company to one that’s responsive to a changing environment and positioned for the future.
The company’s senior management and the Allstate board of directors identify, measure, manage, and monitor material risks, including climate change.
Reduced Operational Footprint: In 2010, Allstate set a goal to achieve a 20% absolute energy-use reduction in its owned portfolio by 2020. It achieved that goal in 2014 and is currently setting a new energy reduction goal. The company continues to reduce greenhouse gas (GHG) emissions. In 2018, Allstate signed a multiyear contract to purchase 100% Renewable Energy Certificates (RECs) for corporate headquarter operations in Northbrook, Illinois.
In 2018, Allstate’s investments included a low-income housing tax credit portfolio of $725 million, a socially responsible investment portfolio of $64 million, and a renewable energy portfolio of $325 million.
Products and Services: To help customers decrease their household carbon footprints, Allstate provides the Homeowners Policy Green Improvement Reimbursement Endorsement, which allows customers to replace damaged or destroyed appliances or equipment with more energy efficient items and be reimbursed for the additional replacement costs.
Allstate manages climate risks within its integrated Enterprise Risk and Return Management (ERRM) framework, which applies risk-return principles, modeling and analytics, governance, and transparent management dialogue to understand the company’s highest priority risks.
Risk is evaluated across six key areas: insurance, investments, financial, operational, culture, and strategic execution. Climate change risks are a component of several of these areas, including catastrophes and severe weather events, auto and property insurance underwriting, business continuity, disaster recovery, investment concentration, and insured exposure concentration. Regulatory changes, customer behavior trends, and Allstate’s reputation are also considered.
To be as responsive as possible to changing conditions, the company monitors state-specific risks and scientific consensus on climate change impacts, as well as competitor trends and competitor pricing methods. Allstate continually evaluates its pricing methodology to identify better ways to estimate future expected losses.
Pricing and Modeling: Allstate’s Catastrophe Modeling and Analytics team and its Pricing Groups monitor climate change information and provide regular updates to leadership. The Catastrophe Modeling and Analytics team partners with Allstate’s Investment team to model mortgage and real estate portfolios under consideration.
For more information, visit www.allstatesustainability.com.