Green insurance: ethical insurers in Australia

If you’re intent on making more sustainable choices this year, know that this could also include your insurance providers. 

Ethical insurance, or green insurance, simply refers to a provider that chooses to not invest in factors that have adverse impacts on the environment, or communities at large. 

The insurer may take sustainable measures, like a focus on renewable energy, sustainable investments and avoiding harmful companies. Some providers have policies that state the bank will never invest in pollutants like coal or gas, or even nuclear weapons and tobacco. Further, some providers may choose to not underwrite for companies that engage with non-sustainable practices, like fossil fuel projects.

While everyone has their own individual definition of what is or isn’t ethical enough, it’s safe to say that a green insurer is one that prioritises the protection of the earth and its natural resources by refusing to invest in industries that seek to harm this.

Are there ethical insurance providers in Australia?

Yes, there are ethical insurance providers in Australia, but the extent can depend on your definition of what is or isn't 'green' or ‘ethical’. There are varying degrees to how insurance providers make sustainable investments, or avoid underwriting companies in the fossil fuel sector. Some may be more proactive than others.

According to MarketForces, insurers Auto & General and Huddle, have both committed to avoiding companies in the fossil fuel sector.

Both providers explicitly state they do not invest in, or underwrite for, companies that operate in the fossil fuel sector. Their insurance provider arms include Budget Direct and Oceania Insurance.

Source: MarketForce.org

If your insurance provider is not on this list, or if your research shows they do invest in destructive industries, it may be worth considering switching to a green insurer. You can read a full list of Australian insurance providers and their fossil fuel investments and underwriting policies here. 

Keep in mind that some ethical insurers may come with greater costs, and you will still need to compare the policy against your insurance needs, to ensure it is the right fit for your financial situation.

Which insurers haven’t committed to ditching fossil fuel investments?

It’s worth keeping in mind that the three major Australian insurers, IAG, Suncorp and QBE, still support fossil fuel companies in some way. 

If you’re unsure if this includes your current provider(s), their brand names include:

• IAG: NRMA, RACV, CGU, SGIO
• Suncorp: AAMI, GIO, APIA, Just Car

These insurance providers have made moves to reduce their involvement in the space, however, customers could feel they could do more. According to MarketForce.org, insurer QBE is still willing to provide insurance to oil and gas projects, although it has pledged to restrict this in 2030, and has stopped providing insurance to new thermal coal projects.

Suncorp is still willing to provide insurance to new gas pipelines and gas-burning power stations but will not underwrite new oil and gas extraction and exploration, phasing this (and thermal coal exposures) out by 2025. Finally, IAG has stated it will end providing insurance to fossil fuel extraction or coal-fired power companies by 2023. However, it is still open to underwriting gas-fired power and gas pipelines.

Turning green: transforming Australia’s insurance industry

The Insurance Council of Australia (ICA), the representative body of general insurers in Australia, has created a climate change action plan, encouraging all insurers to make the switch to more sustainable investments.

Australia has already experienced devastating ramifications of climate change, such as the catastrophic 2019-20 summer bushfires, or the recent flooding in New South Wales and Queensland. In fact, over the last two years, insures have recorded over $13 billion in claims. All of which is working to worsen affordability of insurance, especially in at-risk areas.

According to the ICA, they are working alongside the community, governments, and industry to help ensure insurance remains affordable and accessible by advocating for:

• The general insurance industry to reduce emissions this decade and achieve net zero by 2050.
• Greater resilience investment from all governments to better protect communities.
• Improved resilience and building quality in the built environment, including strengthening the National Construction Code and building standards and improving land use planning.
• Standardised disaster clean-up arrangements that support communities to recover, build back better and thrive in the wake of extreme weather events.
• Strengthening the ICA’s data capability and government data priorities to build a national picture of climate risk.

If your insurance provider has not yet committed itself to more sustainable practices and investments, you may want to pick up the phone and speak to them directly about if, and when, they will commit to moving away from the fossil fuel sector.

If the answer you get is unsatisfactory, or you’re no longer happy with your current provider, it may be worth comparing green insurers and making the switch.

Compare home insurance