Zurich is contemplating rebates on insurance coverage premiums to reward local weather motion

Essay by Eric Worrall

Is Zurich asking too much? If Zurich has enough money left over to reward climate action, maybe everyone should ask for a discount?

Insurers could cut premiums for climate protection measures: Zurich Chairman Summerhayes

Aleks Vickowitsch wealth editor
January 30, 2023 – 5:00 am

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 business.

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

“The insurance sector needs to recognize where progress has been made by consumers and/or businesses on these mitigations… and recognize that in the premiums we charge 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 green customer discount is evidence that Zurich could charge their customers lower premiums?

The reasons – taking climate-friendly measures like putting solar panels on your roof or building some wind turbines doesn’t reduce the risk of a customer making claims. If anything, renewable energy likely increases insurance risk. Solar panels can catch fire and wind turbines can fall, damaging property and bystanders.

turbine that fell on a truck;

burning solar panels on the roof;

When Zurich Insurance’s new chairman thinks his company has enough cash to offer a discount for reasons as arbitrary as a green thank you, the obvious conclusion is that they’re either overcharging and enjoying the excess profit, in its sole discretion, to offer discounts for promotions that do not materially impact insurance risk. Either that, or they cross-subsidize any additional risk green customers incur from other people’s premiums.

Maybe I misunderstood, and there’s another explanation for why Zurich feels able to offer arbitrary discounts. But if I were a Zurich customer outside of their magic circle of preferred green customers, I would now be calling my insurance agent and claiming my own insurance premium discount.

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