With the business community finally taking heed of environmentalists, Verity Adams discovers how insurers are addressing the problem of climate change
This week, the world's top scientists painted a bleak picture of future climatic changes and laid the blame at the feet of mankind. The pressure on the business community, including the insurance industry, to cut carbon emissions has never been greater.
Friends of the Earth has commended the UK's largest insurers and brokers on the steps they have taken so far to reduce their own carbon emissions. But, as reported last week (News, 1 February), the group says the insurance industry must do more.
It has called on the industry to ramp up its efforts to become 'greener' – encouraging policyholders to cut their carbon emissions and put money into green investments.
"Is [the insurance industry] up for doing it, that's the big question?" says Mike Childs, head of campaigns at Friends of the Earth.
The insurers contacted by Insurance Times appear to have made a good start. Royal & SunAlliance (R&SA) became carbon neutral at the end of last year, while Aviva claims to be committed to become the first insurer to carbon neutralise worldwide.
Among the broking community, AA Insurance has already set targets to reduce its energy consumption by exploring the use of dual-fuel and energy efficient company cars and has set up 'green teams' within the business.
But brokers Marsh, JLT, Willis, Swinton and Lockton were not as forthcoming when Insurance Times asked them what strategies they had in place.
In contrast, Emery Little, which has an annual gross written premium in the region of £7m, claims it has become the first UK broker to offset the aviation carbon emissions of its clients, with the launch of its GreenFly Initiative.
A number of companies within the insurance industry have also set up corporate social responsibility teams – 'green teams' – to investigate what the business would have to do to reduce its carbon footprint and move closer to becoming carbon neutral.
These moves have been given the thumbs up by Friends of the Earth. But how realistic are calls for incentives such as offering reduced premiums for energy efficient household or motor policyholders?
Some of the bigger players, such as AXA, are considering schemes to reduce insurance premiums for small businesses or policyholders that lower their carbon emissions. This has been under consideration for some months although a decision has not yet been made.
The Co-operative Insurance Society and R&SA have already launched eco-friendly motor policies.
But the answer from Allianz Cornhill doesn't sound like the one Friends of the Earth was hoping to hear. Steven Ward, household manager for Allianz Cornhill Personal, was particularly sceptical of offering incentives to reduce emissions.
He says: "For a start, how do you measure it? Customers could live in a very carbon efficient home, but drive a large car and take long haul flights on a regular basis."
Graeme Merry, environmental specialist at Heath Lambert, conceded incentivising was "a big ask" although "not bad in theory".
So if this year's targets are met and achievable goals are set, environmentalists should soon start applauding the industry a little louder and not show the market up to be blowing a lot of hot air. IT
