Allianz Insurance accelerates adoption of green parts to tackle industry challenges

18 May 2023 | David Young

As the motor insurance industry faces a multitude of challenges, including supply chain issues and sustainability concerns, the use of recycled vehicle parts, also known as green parts, is becoming increasingly important

Allianz Insurance accelerates adoption of green parts to tackle industry challenges

Graham Gibson, chief claims officer at Allianz Insurance

Allianz Insurance, in partnership with Synetiq, has launched a digital platform to facilitate the sourcing and purchasing of green parts and has refreshed its motor fleet policies to encourage their use. Graham Gibson, chief claims officer at Allianz Insurance, discusses the benefits of green parts and the company's efforts to promote their adoption.

The last two years alone have posed a myriad of disruptions for the insurance industry, challenging existing processes and encouraging insurers and society at large to consider the development and adoption of new solutions to minimise the impacts felt. Motor insurers, in particular, have faced the toughest challenge, not only due to double-digit claims inflation and new vehicle technology, but also as a result of supply chain issues which have been a topical discussion point for months.

In an effort to identify alternative repair options and with increased focus on adopting more environmentally friendly solutions with the aim of reducing carbon footprints, the use of recycled vehicle parts, also known as green parts, is becoming increasingly more important. As both a sustainable and faster method of repair, which does not compromise the integrity and standard of the vehicle, it is the perfect solution for both insurers and customers alike.

The benefits are clear: green parts can improve repair lifecycles, are more cost-efficient, and produce less CO2. For reference, the replacement of one front car door amounts to a saving of 69.2kg CO2. And these benefits are now being recognised more by customers as the perception of reused vehicle parts has shifted.

At Allianz, we recognise the importance of increasing our use of green parts both from a customer and a sustainability perspective. All of our green parts are sourced from our trusted partners, who are accredited by the Vehicle Recyclers' Association.

This gives us complete confidence in their provenance and also helps ensure that the parts we use are genuine original manufacturers, taken from like-for-like vehicles and are either the same age or newer than the vehicle part being replaced.

In partnership with Synetiq, we launched a digital platform that helps vehicle repairers source green parts. The platform, mygreenparts, digitalises the supply of recycled spare parts, facilitating the purchasing process for body shops and supporting sustainable repairs. Offering parts that match repair standards and insurance requirements, it is the first-to-market solution for these two sectors. When repairers generate an estimate for a vehicle repair, their software automatically notifies Synetiq's stock control system of the parts required—within rules agreed with Allianz. This enables Synetiq to offer matching parts. These are non-safety critical parts, such as doors, body panels and headlamps, that have been graded, cleaned, and checked and come with a certificate of parts conformity.

We also refreshed our motor fleet policies to reduce repair times, with the new wordings prescribing automatic opt-in for fitting green parts and encouraging the use of our approved repairer network through excess discount incentives. Effective st March, green parts are automatically fitted for non-safety-critical repairs where an appropriate part is available. Previously, explicit permission had to be sought for each repair, so the new wording will speed up the claim process.

While the uptake of green parts by insureds was initially low, increased education has resulted in more positive sentiment, as evidenced in the recent State of the Industry Report published by the Auto Body Professionals Club, which noted that 79% of body shops are now fitting green parts – the highest ever recorded number, 74% of which stated that they were using more green parts in 2022 than the previous year. At Allianz, we also conducted our own research on customer sentiment towards green parts, which paints a very positive picture. Of the 250 motorists surveyed, the majority (69%) would choose the option of a green replacement part to repair their vehicle, giving environmental protection as the principal motivator (77%).

However, the findings also showed that around one quarter of those surveyed would need further convincing of the benefits of green parts, and for a hard line of 6%, it simply isn't an option. This indicates that while great improvements have been made, now is not the time to become complacent in our efforts to encourage further adoption.

The multi-faceted benefits of using green parts are clear, particularly in the current climate when use can help alleviate the supply chain delays that show little sign of abating. These parts do not pose any safety implications, and also speed up repair lifecycles and contain claim costs – which ultimately benefit the customer and their insurance premium. At Allianz, we have seen the positive impact of using green parts and will continue to work with our supplier partners, brokers, and customers to promote this more sustainable solution.