Canadian insurers are showing a preference for purpose-built green buildings over retrofitted ones, especially when it comes to risk assessment and pricing.
According to Mark Whiteley (pictured), vice president of commercial insurance at Billyard Insurance Group, the distinction between new green builds and retrofitted properties is an important one for underwriters, and it increasingly shapes how insurers assess risk.
“I think insurers are looking more favorably on new builds than they are on retrofits,” Whiteley told Insurance Business. “When you have a retrofit, you're trying to tie in new technology with existing technology. And sometimes those don't work harmoniously.”
In contrast, purpose-built green structures tend to feature fully integrated systems (solar, HVAC, insulation, or energy storage) that were designed to function in sync from the outset.
“When you get a new build where all the systems are meant to be working in that sort of a way, it’s certainly more favorable,” Whiteley said.
One of the main concerns insurers have with retrofitted properties is the risk of system misalignment. When modern technologies, like solar arrays, smart thermostats, or greywater systems, are layered onto aging infrastructure, the result can be unpredictable.
“Insurance companies would look more favorably on a new build where everything's working together,” Whiteley said. “As opposed to a retrofit, where you have one piece of new technology working with a more outdated one, and sometimes they don’t work together as well.”
Whiteley noted that hybrid systems can increase both the frequency and severity of claims, particularly when failures cascade across connected systems. In commercial buildings, that can amplify business interruption losses or create new liability exposures.
It also poses challenges for claims adjusters, who may struggle to assess fault or source replacement components when newer technologies interact poorly with older ones.
For insurers, one of the key concerns with green retrofits lies in the reliability of newer technologies, Whiteley said. When building owners opt for solar, geothermal, or other energy-efficient systems offered by newer or lesser-known companies, the lack of long-term performance data can be problematic, he warned.
Without a proven installation history, these products present a higher degree of uncertainty – especially in terms of durability, serviceability, and claims predictability.
Insurers are also cautious about who installs the technology. If a product hasn’t been widely adopted, or if it’s tied to a company with limited market experience, Whiteley said there’s often a risk that installation standards may vary or fall short. That creates exposure not only to system failure but also to downstream impacts like fire risk or mechanical breakdown.
These concerns are amplified during the claims process. When a retrofit involves niche or proprietary components, finding qualified contractors to repair or replace damaged parts can prove difficult. Delays in sourcing labour or materials extend business interruption losses and complicate restoration timelines – issues insurers aim to avoid. As a result, underwriters tend to flag unfamiliar or unproven installations as elevated risk, particularly when they may affect claims resolution or customer recovery timelines.
“At the end of the day, it’s the insurer who takes the brunt of the cost and the risk on how high-quality the product is or how well it was installed,” he said.
For brokers advising clients on sustainable upgrades, navigating between insurer caution and client enthusiasm can feel like being stuck between a rock and a hard place. The challenge, Whiteley said, is helping clients pursue environmentally conscious improvements while ensuring those changes don’t inadvertently increase their risk profile (or leave gaps in coverage).
One way to stay ahead of potential issues is by scrutinizing the warranties attached to new green technologies. If a product malfunction could impact other systems in the building, it’s crucial to confirm whether the manufacturer or installer offers a comprehensive warranty that could cover those downstream effects.
Brokers, Whiteley said, can play a key role in helping clients understand the boundaries between product warranty coverage and what falls under their insurance policy. Reviewing warranty terms early in the process helps avoid confusion in the event of a claim – and may even prevent an insurance claim altogether if warranty protections can be activated first.
“Asking the client and seeing where the lines are drawn is crucial. You should see if there's any ability for them to utilize warranty services, as opposed to having something falling and then having to make claim on the insurance policy,” he said.
