Many businesses are marketing to a new kind of customer, one who recycles religiously, eats organic/fair trade fruits and vegetables, and shops with their environmental impact in mind. This trend towards eco-friendly products is breaking out of the retail and manufacturing industries and spreading into unconventional sectors. Now, even insurance companies are “greenwashing” their home and auto policies, offering customers better rates or environmental incentives for sustainable rebuilding after a disaster. Money has always been a powerful motivator, and insurance policies are cashing in on consumers who want to be responsible in every aspect of their lives.
One way in which insurance companies are appealing to green buyers is through discounts for hybrid owners or those who limit their driving. Traveler’s, Farmers, and other auto insurance companies are offering up to 10% discounts on policies for hybrid vehicles. The theory is that hybrid owners are more conservative on the road and in the maintenance garage than, say, Hummer owners. As Evan Mills, a scientist at Lawrence Berkeley National Laboratory told Businessweek, “Customers who buy hybrids tend to have a more conscientious profile.” So far, these policies are limited to a few companies, but the trend is expected to grow in coming years.
Many auto insurers are also offering discounts to green consumers who keep their mileage low. Customers of Progressive, GMAC, and Farmers in certain states receive discounts of 25% to 54% for driving less, depending on how many miles they log. The insurance companies use various technologies to track participant’s mileage, from GPS devices to small data-collecting devices that plug into the steering column of certain vehicles. Some consumers are limiting their driving for environmental reasons, though these types of policies equally benefit those who are doing so due to rising gas prices and other economic crunches.
Another trend in the insurance industry is policies which allow customers to rebuild using sustainable, eco-friendly materials and technology. Lexington Insurance, which is owned by AIG, will charge an extra 3% premium so homeowners or commercial owners can replace damaged property with energy-saving appliances, better insulation, and renewable or recycled materials. They also offer a product called LexElite Eco-Homeowner aimed at the growing number of households who actually generate their own electricity. As a recent press release explains, “If a homeowner’s alternative-energy system has a covered outage, LexElite Eco-Homeowner will protect the homeowner against lost income generated from selling surplus energy back to the local energy company and will cover the extra expenses incurred to purchase replacement electricity.”
While many insurance companies are going paperless, offsetting carbon emissions, and making donations to environmental organizations, the trend setters are now trying to pass these values along to consumers through competitive policies. These discounts could be the motivating force that convinces some drivers and homeowners to choose their purchases based on environmental impact. However, not everyone is convinced that an insurance policy is the appropriate place to make an impact. As Consumer Federation of America spokesman J. Robert Hunter told Businessweek, “”Rather than pay an extra 3% for something that may never happen, why not buy better insulation?” As Hunter suggests, these green insurance policies could simply be a marketing ploy that has no real ripple effect in our carbon emissions. Hopefully, though, the idea that buying “green” could save money might be the extra incentive that people need to push them towards environmental responsibility.