Eco-conscious consumers should look for ethical insurance
Responsible consumers might want to think about looking again at where they buy their insurance, according to a recent report.
Insurance companies in the US and Europe still have almost £455bn (US$600bn) worth of investments in fossil fuel companies according to sustainability charity Ceres and campaign group Unfriend Coal.
This is despite the fact that fossil fuels accounted for 36.81bn tonnes of CO2 emissions in 2019.
In supporting the fossil fuel industry, both by providing cover for oil, coal and gas companies and investing their assets in the sector, insurance companies are enabling the very thing that in many cases they are insuring against.
In 2018, insurance companies paid out $80bn (£61bn) against natural disaster claims, compared with $50bn (£38bn) in 2016, according to an annual report by firm Munich Re.
“The insurance industry is quite far behind other industries [in divesting from fossil fuels]. Even banking, which is notoriously bad, has been under pressure for quite a while,” said Clare Carlile, a researcher for Ethical Consumer told Positive News.
In addition, underwriters often don’t publish any information about where they invest their money making it difficult for consumers to understand how sustainable they are and choose accordingly.
There are some encouraging signs of change. The number of insurers withdrawing cover for coal has more than doubled in 2019. In July 2019, Chubb became the first US insurer to announce it would phase out its coal investments and insurance policies and according to Unfriend Coal, 17 major insurance companies – with a combined 20 per cent of the global industry’s assets – have now divested from coal.
“Logic says the insurance industry should be the global leaders in the race to decarbonise as they have so much to lose [but] they are not,” said Matthew Criddle, founder of ethical insurers, Naturesave. “However, we are starting to see signs of real change from the big insurers. It is not yet happening at the pace we really need, but it will accelerate if consumers…get on board.”
Criddle believes part of the reason insurance companies have been slow to act is because they have underestimated consumer demand for ethical products. “We know that there is huge growth in green electricity, in local and organic food, [in] eating less meat, in flying less and in ethical banking,” says Criddle. “This is driven largely by consumers wanting to bring about change using their purchasing power. We want consumers to realise that their choice in insurance really can make a difference. Choosing an ethical insurance company will benefit the environment and drive further positive change within the insurance industry itself.”