From Watts Up With That?

Essay by Eric Worrall

Is Zurich charging too much? If Zurich has enough spare cash to reward for climate action, perhaps everyone should demand a discount?

Insurers may cut premiums for climate action: Zurich chair Summerhayes

Aleks Vickovich Wealth editor
Jan 30, 2023 – 5.00am

Former regulator Geoff Summerhayes says providing incentives to reduce carbon emissions, such as lower insurance premiums, will be a key focus of his tenure as chairman of Swiss insurance giant Zurich’s Australian operations.

…

Mr Summerhayes said he was lured back to the insurance industry in part because of its broader social role in helping to mitigate key social risks, including climate change.

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“The insurance sector needs to recognise where advances have been made with the consumers and or businesses in those mitigations … and recognise that in the premiums that we’re charging those customers,” he said.

…Read more: https://www.afr.com/companies/financial-services/insurers-may-cut-premiums-for-climate-action-zurich-chair-summerhayes-20230126-p5cfmw

Why do I think offering a discount to green customers is evidence Zurich could be charging their customers lower premiums?

The reasons – climate friendly actions like adding solar panels to your roof or building a few wind turbines do not reduce the risk of a customer making a claim. If anything, renewables likely increase the insurance risk. Solar panels can catch fire, and wind turbines can fall and damage property and innocent bystanders.

Turbine which fell on a lorry;

Rooftop solar panels burning;

If the new chairman of Zurich Insurance feels his company has enough cash to offer a discount for reasons as arbitrary as a green thank you, the obvious inference is either they are charging too much, and have the excess profit to offer discretionary discounts for actions which have no significant bearing on insurance risk. Either that, or they are cross subsidising any additional risk incurred by green customers from other people’s premiums.

Maybe I’ve misunderstood, and there is another explanation for why Zurich feel able to offer arbitrary discounts. But if I was a Zurich customer outside their magic circle of favoured green customers, right now I would be ringing my insurance agent and demanding my own insurance premium discount.