In the wake of the warmest June-July-August period on record, life insurers face a burning question from global consumers: What are you doing about climate change?
Many insurers can demonstrate that their businesses consider ESG (Environmental, Social, and Governance) issues and meet environmental regulatory and reporting requirements. The entire industry is also aware that it will have to contend with the impact of climate change on mortality and morbidity risks, a reality that will eventually affect product pricing.
But perhaps the most immediate effort insurers can make is to explore and adopt “green” products that appeal to the 65% of people globally who say they will buy sustainable products. This article will explore the changing habits of consumers and what really motivates them to purchase green products and services. It will also detail innovative products from around the world that are designed to help consumers reduce their carbon footprint, financially support green initiatives, or assist people directly impacted by climate change.
Making Sustainability Easier for Consumers
Consumers have proven willing to make more sustainable choices. A 2020 study by Deloitte found that 43% of consumers surveyed said they have opted for brands with more sustainable products or services.
When considering strategies to appeal to green consumers, it is important that as an industry we ensure that any products or services are robust, backed up by evidence, and avoid any perception of “greenwashing."
So, what strategies can insurers use to enter the conversation and encourage green behavior among consumers?
- Social influence appeals to the human need to fit in and conform to the behavior of those around us. It can take the form of a call to duty, a competitive challenge, or demonstrable evidence of a consumer’s green commitment, like the opportunity to display a badge or pin.
- People are creatures of habit. It takes effort to break a bad habit and adopt a good one, but once incorporated into a person’s daily routine, it can have long-term positive effects. Businesses can nudge consumers toward better habits by offering incentives or making the “good” choice the default option.
- With the power of the domino effect, an opportunity to take a small action can make a consumer more likely to make larger changes down the road. Companies can consider incremental programs that “step up” more sustainable actions as customers participate.
- Communications around green products can appeal to a consumer’s emotional side and their rational side. For the emotional consumer, offer public praise when a consumer opts for a greener choice. For the rational consumer, quantify the cost savings of a greener choice. Whatever the tenor of the communications, remember that people are naturally loss-averse and prefer avoiding losses to achieving equivalent gains.