Three-quarters of drivers would switch to, or stick with, an insurance company that’s able to prove that they are environmentally friendly, according to new research.
Solera, the global automotive technology company, asked 10,000 drivers and 500 claims experts about their attitude to ESG within the car insurance space. The results appear to demonstrate the appetite that exists, particularly among policyholders, for strong environmental performance.
According to the World Economic Forum, 65% of consumers want their spending choices to contribute towards a healthier and more sustainable life – but years of unsubstantiated marketing claims about ESG performance have cast doubt on how green companies really are, and created a culture of ‘greenwashing’.
That explains why many consumers want to see proof of ESG progress – but Solera believes that insurers can realise genuine upsides if they can back up their environmental claims.
Consumers overwhelmingly want green products
“In the insurance and automotive markets, there is a growing call for sustainable offerings,” explains Jing Liao, Chief Administration Officer and Chair of Solera’s ESG Committee. “In turn, this can benefit their reputation, bringing higher customer lifetime value, long-term savings and tax reductions, leading to the development of new products whilst having a positive impact on the environment.
“Despite a growing awareness of sustainability, there remains a notable number of companies that perceive it as a mere ‘checkbox’ requirement rather than an integral component of sound business management. For some, the pursuit of sustainability appears to clash with the overarching priority of maximising profitability.
“Our initial findings show that, with every incremental percentage point of repairability, we estimate a substantial yield of $10 in the claim. When incorporating eco-friendly components, each uptick in the proportion of green parts utilised within the claim equates to a potential $35 extra in cost reduction and 30kg less of CO2 emissions, which benefit both the insurer and the consumer.”
Half of insurers ‘not tracking’ Scope-3 emissions
Despite the apparent appetite for companies who do the right thing by the environment, Solera’s research has also cast doubt on insurers’ ability to keep pace with eco-conscious consumers and their expectations.
Insurers are facing multiple hurdles to becoming more sustainable, including almost a third (32%) thinking that the process of cutting emissions is costing them too much. Nearly three in 10 (29%) are scared of being seen to be greenwashing while they try to reduce their emissions, and more than half of insurers surveyed aren’t measuring their Scope-3 emissions – one of the biggest factors in a company’s overall environmental impact, which is made up of their indirect financed emissions.
Almost half of insurers (47%) need to track and manage their emissions data better, Solera says, but thankfully 80% of those surveyed plan to change how they track and measure data over the next 12 months.
Liang believes that, with many regulatory obligations approaching, it is now imperative for insurers to embrace meaningful ESG action. “The regulations are real. The path to success is not a turn of the switch. Those who don’t take action will take a bigger hit as we get closer to those deadlines, and more importantly we will lose time to do the right things to make the world healthier,” she says.
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