Continuing our discussion of aligning your personal ethics with your financial choices, let’s turn our attention to insurance. You probably have several insurance policies, whether it’s health, life insurance, car, business, etc., so if you’re looking to extend your view of your ethics and your financial products, insurance could be another destination for your study.
The insurance industry is a large part of the financial services industry in Australia — it represents $64 billion, according to IBISWorld. The five largest general insurers in Australia are Insurance Australia Group (IAG), Suncorp, Allianz Australia and QBE Insurance.
Let’s look at this question of finding insurance that’s acting in line with your values from two perspectives: their operations and their products. What I’m going to write about here is by no means an exhaustive list, but I think it raises considerations on how you can start your own research and make your own decisions.
=Q=
To begin with, let’s talk about what I mean by operations, which is how an insurance company decides what they will insure and how they will price policies for entities and people. Insurers have a large role to play in the process of adapting to and mitigating climate change, and unsurprisingly, climate change is a serious concern for many Australians.
In recent years, activists and investors have been in serious discussions with insurance companies all over the world regarding their insurance activities for fossil fuel operations and their investment in fossil fuel companies. Insurance companies are, of course, exposed to the impacts of climate change in that the properties and lives they insure are negatively affected by natural disasters and changing weather patterns that are shifting because of climate change.
For example, QBE has committed to withdrawing from insurance services for thermal coal customers by 2030, and it is part of the newly created Australia Sustainable Finance Initiative (ASFI). Suncorp has also announced that it will “not directly invest in, finance or underwrite new thermal coal mining extraction projects, or new thermal coal electricity generation. Suncorp will phase out of its exposures by 2025.” IAG has committed to phasing out all coal, oil and gas underwriting by 2023. Allianz has also announced that will not provide insurance coverage for single coal-fired power plants and coal mines.
Insurers are also major investors themselves, in that they have portfolios of holdings as well. There, too, insurers have made commitments about divestment from investments in coal. There have been various degrees of divestment commitments, according to the latest Unfriend Coal report, which ranks 30 global insurers for their performance.
Beyond internal insurance operations, there is also the question of finding insurance policies for you that match your ethics. There are some interesting alternatives, but this market is very much in development.
QBE has produced an innovative product, Premiums4Good, where the insurer invests a portion of premiums into investments with an additional social or environmental objective. These investments include social impact bonds, social bonds, green bonds and infrastructure, QBE says on its website. Projects include renewable energy and waste conservation projects, as well as social programs that deliver direct, sustainable benefits to vulnerable people like the homeless or at-risk families.
In 2019, QBE committed to contributing a minimum of $100 million on behalf of all our customers through the Premiums4Good initiative.
How about in health insurance? Well, Health Insurance Fund (HIF) has been certified as Australia’s first carbon-neutral health fund, as certified by the Carbon Reduction Institute.
A third product that exemplifies movements towards ethical or values-based insurance is a car, home and travel insurer Huddle Insurance, which is seeking to take advantage of that demand with its app-based offerings. Huddle is a tech-driven company, with chatbots and other IT-driven features to verify claims. Huddle is certified as a verified B Corporation — B Corps, as they’re known, are recognised for having “the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.”
In Huddle’s case, they classify their activities as having “passion for oceans and fields, for people and communities.” Huddle donates 1 per cent of its revenue to 1% for the Planet, a global organisation that supports environmental projects. Huddle also says that it invests in a portfolio in a responsible manner, although details of their investments don’t appear on their website.
These are just a few examples of ways that companies are working to align values with product and operations.
I do want to emphasise, however, that everything I’ve just discussed is just information for you to consider. I’m not in the business of advising, and it’s best to do your own research and speak with financial professionals as you feel necessary.
The good news is that there are products and services that can help you match your values and your investments. There are many people like you who want to purchase financial products in ways that benefit people, planet and our future, and there are ways to do this. But only you can decide what insurance product is right for you, your values and your lifestyle considerations.
