Ethical insurance explained

How ethical is your insurance? We look at the rise of socially and environmentally responsible insurance policies – and find out what they really offer

Where do your insurance premiums end up? If you’ve never asked yourself that question before, you might be surprised.

In 2000, green pressure group Friends of the Earth (FoE) created a league table of financial firms behaving in “unethical” ways. FoE accused many of the firms of supporting the clearance of forests and habitats, polluting waterways, emitting greenhouse gases and working alongside oppressive regimes. It concluded that the vast majority of investment funds managed by insurance groups are supporting unethical activities.

Since then, more and more companies are looking to persuade us of their green credentials.

What is ethical insurance?

Ethical insurance is commonly split into two main areas:

  • life and pensions insurance;
  • general insurance of homes, vehicles, holidays and businesses.
These providers commonly offer discounts to greener customers and/or commit to specific environmental policies.

How to green your insurance

If you’re uncertain about your insurers’ credentials, ask them about their ethical policy. You could also find out if they’re signed up to the United Nation’s Environmental Programme’s (UNEP) Insurance Industry Initiative. This calls on all insurers to incorporate environmental considerations into their internal and external business activities.

For life and pensions insurance – a number of ethical fund providers (read more in our ethical investment section) offer life assurance products through their ethical funds. That way, your money will be invested according to set ethical guidelines that determine which company activities are avoided or supported. Before making any decision about a fund, you should always seek proper independent financial advice.

For home, car, travel and general insurance, there is a small but growing number of companies and policies committed to social and environmental goals. They include:

  • Naturesave Policies Ltd. This is an ecological insurance intermediary which offers household buildings and contents insurance and annual travel insurance, among others. Naturesave promises that 10 per cent of the premiums generated from the sale of all home buildings, contents and travel policies goes to benefit environmental and conservationist organisations on specific environmental projects via The Naturesave Trust.
  • Climate Sure is another dedicated green insurer. It offers a travel and motor insurance policy which offsets the CO2 emissions generated by these activities. The amount to offset is calculated individually by referring to the make and model of your car and your road mileage. For travel insurance, the CO2 emissions to neutralise are calculated by reference to distance travelled to your holiday destination.
  • When it comes to car insurance, some insurers offer discounts for drivers who own greener cars. For example, More Than offers to insure hybrid cars and other alternative fuel vehicles, such as cars powered by liquefied petroleum gas, with up to a 15 per cent discount.
  • The Co-op's "ecoinsurance" scheme offers cash incentives as well as environmental pledges. It offsets the equivalent of 20 per cent of the CO2 from every vehicle insured and also offers premium discounts for greener cars.