Will life insurance be the next product to go ‘green’?

By Susan Rupe

With so much consumer interest in healthy living and sustainability, will the life insurance industry begin to offer “green” life insurance? A panel of researchers gave their views during a recent Society of Insurance Research educational session.

Studies have found a link between reduced carbon footprint activity and improved mortality risk, said Matt Berkley, director of strategic research with RGA Reinsurance.

“We pulled from a number of medical studies and found that there are links to improved mortality and these green activities - primarily in the areas of food, healthy consumption and transportation or physical activity,” he said.

He added that RGA’s research found the customer carbon footprinting space “definitely is an expanding market and it’s already being used by banks that are taking this purchasing behavior and rewarding customers for green decisions - whether that’s walking more, using less gas, driving a hybrid vehicle, eating better.”

RGA hasn’t seen a carbon footprinting score linked to an offer with a life insurance policy yet, Berkley said, “but we do see this is as possible opportunity for a carrier to attract a segment of the consumer who is interested in these kinds of green rewards.”

The most common green products in the life insurance space now, he said, are life insurance policies with underlying green investments.

Carriers are offering policies that are linked to sustainability investments, sustainable investment funds, or environmental, social and governance funds, he said. However, most of that product development is found outside the U.S. He cited two examples:

A carrier in Singapore offers a policy that invests only in things that make a positive impact on the environment and pledges to donate to an ecofriendly charity on the policyholder’s behalf.
A carrier in Hong Kong offers policyholders a rebate policyholder receives a premium rebate if they go paperless and they use the carrier’s app for all their interactions.

Life insurers “will need some convincing about the relevance of green insurance products,” Berkley said.

He said RGA conducted a climate change survey of life insurers in South Africa. The survey asked about climate-related topics and their impact on underwriting, claims and future product development as well as the insurers’ appetite for green products.

More than half of the respondents – 55% - said climate change is low or no priority with them. None of the carriers that responded had any green products on the market or were making climate- related changes to underwriting or product development, he said. Only about half of the insurers who responded said they believe consumers will pay more for a green insurance product.

Consumers show more interest in green

Life insurers may not have any green products up their sleeves, but consumers are considering sustainability when making the decision to purchase or invest. That was the word from Jake Littman, senior research associate with Corporate Insight. He discussed 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 healthy or sustainable living and their interest in life insurance policies that offer ESG investment options.

He shared these results:

61% of respondents said they research a carrier’s commitment to sustainability before they buy a policy.
44% said they research an investment’s sustainability impact before they decide whether to invest.
Less than half said that a carrier’s sustainability commitments have an impact on their decision to purchase life insurance.
70% said they would opt for a life insurance policy that offered premium discounts for healthy and sustainable living.

Corporate Insights also found that between 20% and 30% of respondents said they would be willing to share personal data such as driving, diet and spending habits in return for a premium discount.

“Maybe some experts in product design could help us formulate what a green life insurance discount might look like, how it would be structured, what a reasonable incentive might look like in the life insurance space,” Littman said.

Life insurers should take the survey results as an indicator of consumer interest in green products, he said.

“There is a high opportunity here to engage with customers, to differentiate yourself and help the environment,” he said.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].