With consumers showing great interest in healthy living and sustainability, the question is whether the life insurance industry will soon offer “green” life insurance. A panel of researchers expressed their views at a recent Society of Insurance Research training event.
Studies have found a link between reducing the carbon footprint and improved mortality risk, said Matt Berkley, head of strategic research at RGA Reinsurance.
“We looked at a number of medical studies and found that there is a link between improved mortality and environmentally friendly activities – particularly in the areas of diet, healthy consumption and transport, and physical activity,” he said.
He added that RGA’s research found that the area of customer carbon footprint “is definitely a growing market and is already being exploited by banks, who are tapping into this purchasing behaviour and rewarding customers for making environmentally friendly choices – whether it’s walking more, using less petrol, driving a hybrid vehicle or eating better.”
RGA has not yet seen a carbon footprint value associated with a life insurance offering, Berkeley said, “but we see this as a potential opportunity for a provider to target a segment of consumers interested in such green premiums.”
The most common “green products” in life insurance today are life insurance policies with underlying “green” investments, he said.
Insurers are offering policies linked to sustainability investments, sustainable investment funds or environmental, social and governance funds, he said. However, most of this product development is taking place outside the U.S. He gave two examples:
- An insurer in Singapore is offering a policy that only invests in things that have a positive impact on the environment and pledges to donate to an eco-friendly charity on behalf of the policyholder.
- An insurer in Hong Kong offers its policyholders a discount: the policyholder receives a premium discount if he or she forgoes paperless payments and uses the insurer’s app for all his or her interactions.
Life insurers “need to be convinced of the relevance of green insurance products,” Berkeley said.
He said RGA had conducted a climate change survey among life insurers in South Africa. The survey asked about climate-related issues and their impact on underwriting, claims and future product development, as well as the willingness of insurers to offer environmentally friendly products.
More than half of respondents – 55% – said climate change was not a priority or a low priority for them. None of the insurers who responded have green products on the market or are making climate-related changes to underwriting or product development, he said. Only about half of the insurers surveyed said they expect consumers to pay more for a green insurance product.
Consumers are more interested in eco
Life insurers may not have green products on offer, but consumers are considering sustainability when making purchasing or investment decisions, says Jake Littman, senior research associate at Corporate Insight. He outlined the results of Corporate Insight’s survey of 800 adults, mostly Generation X and Millennials, about their interest in life insurance policies that offer discounts for a healthy or sustainable lifestyle and their interest in life insurance policies that offer ESG investment options.
He shared these results:
- 61% of respondents said they find out about an insurer’s sustainability commitment before taking out a policy.
- 44% said they research the sustainability impacts of an investment before making an investment decision.
- Less than half said that a provider’s commitment to sustainability influenced their decision to take out life insurance.
- 70% said they would choose a life insurance policy that offers premium discounts for a healthy and sustainable lifestyle.
Corporate Insights also found that between 20 and 30 percent of respondents would be willing to disclose personal information such as driving, eating and spending habits in return for a premium discount.
“Perhaps some product design experts could help us articulate what a green life insurance discount might look like, how it would be structured, and what an appropriate incentive in the life insurance space might look like,” Littman said.
Life insurers should view the survey results as an indicator of consumer interest in environmentally friendly products, he said.
“There are great opportunities here to connect with customers, stand out from the crowd and do something for the environment at the same time,” he said.
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