The number of captive-backed insurance programmes with adjustable premiums linked to sustainability and environmental performance are expected to increase.

In the latest episode of the Global Captive Podcast Robert Eigenheer, head of corporate finance at the Swiss Federal Railways (SBB), and Marine Charbonnier, head of underwriting for captives and facultatives in Europe and APAC at AXA XL, discussed SBB’s programme and the potential for further uptake in this area.

SBB has owned its captive – SBB Insurance AG, domiciled in Liechtenstein – since 2000.

The captive underwrites a European-wide property and liability programme, as well as  cyber insurance, motor fleet and construction risk. SBB Insurance also utilises the commercial reinsurance market to transfer risk that exceeds its appetite.

While SBB is the largest mobility provider in Switzerland, it is also one of the country’s largest energy producers and real estate companies.

Sustainability is a core part of SBB’s mission and Eigenheer explained that the company is committed to improving its environmental performance and reducing its greenhouse gas emissions.

“As part of our dedication, we have joined the Science-Based Targets initiative and we aim to achieve net zero emissions by 2040 in accordance with the Climate and Innovation Act,” he said.

“To reach these goals, we are focusing on renewable energy sources, increasing energy efficiency and transitioning towards a circular economy.”

This corporate effort on environmental performance stretches across the group, with SBB finding a valuable role for its captive.

Partnering with three major (re)insurance companies, including AXA XL, Eigenheer has developed a sustainability-linked reinsurance project launched in August 2024.

“The solution is designed to financially support SBB’s greenhouse gas emission targets, and reinforce our commitment to sustainability,” he added.

The initial project sees the insurance premium spend linked to how the group performs on reducing its emissions.

“That accelerating sustainability project and positive impact on our environment is the direct outcome of this project, but it has for us also rewarding side effects,” Eigenheer said.

“As a role model in sustainability, we benefit from this solution in various ways because it supports our value proposition at the very heart.

“Clients choose SBB for its sustainable mobility solutions, employees [choose] SBB because it’s regarded as a sustainable organisation and employer.

“Insurance companies shall follow suit because we offer them exposure to risks, which are aligned to their sustainability targets.”

Charbonnier said on the podcast that the insurer was proud to partner with SBB on the project and support such an innovative solution.

She believes there is potential for more companies to put in place similar solutions, depending on their sustainability objectives and targets.

 ”We do have other clients who want to adjust underwriting conditions, especially the captive ones, to adapt them to specific internal criteria linked to the group sustainability strategy,” Charbonnier said.

“I’m convinced that adjustable insurance programmes with captive involvement will continue to grow, especially with the group ESG strategy initiatives that also consider its risks.

“We are seeing companies using their captives because AXA XL supports them. This could be in their underwriting… the quality of claims data we provide to the captive, the additional analysis of short, medium, and long-term exposures and specific recommendations to reduce exposures and to protect sustainable investments.”

Eigenheer added that he not only believes, but “deeply hopes” that the sustainability-linked insurance programme will be adopted by as many captives as possible.

“We already had positive feedback from our captive peers, insurance companies, but also the academia,” he said.

“There are compelling reasons for both the insured organisations and the insurance companies to implement such a sustainability-linked concept.

“If you’re curious about the benefits, I have also written a detailed five step guide on my personal LinkedIn account that explains the concept and its advantages.

“We are also here to share best practice and ideas and let me know what you think about this concept.”

Listen to the full podcast discussion with Robert Eigenheer, of Swiss Federal Railways (SBB), and Marine Charbonnier, at AXA XL, on the Global Captive Podcast here, or on any podcast platform. Just search for ‘Global Captive Podcast’.