How Motor Insurers Engage Their Clients in Climate Change

Motor insurance is one of the most common types of insurance. It provides financial protection in case of accidents, theft, fire, or other damages to the vehicle. However, motor insurance also faces some significant challenges int he face of climate change and carbon emission reduction targets.

One of the main challenges is the far-too-slow adoption rate of electric vehicles (EVs) and plug-in hybrid electric vehicles, which are expected to reduce greenhouse gas emissions and improve air quality. The decision to buy an EV depends on many factors: preferences, availability, affordability, infrastructure, regulations, and incentives. Taking all these decision factors into account, the global stock of EVs only reached 10.2 million in 2020. But it needs to increase to 230 million by 2030 to meet the "1.5 degree" goal of the Paris Agreement. We are looking at a x23 factor within the next seven years!

We need x23 times more Electric Vehicles by 2030 to meet the 1.5-degree goal.

Another challenge is the client engagement with sustainable claims options. So far, only few clients prefer to repair their damaged vehicles with recycled or eco-friendly parts, or to offset their carbon emissions through voluntary carbon credits. However, these options may not be widely available or attractive to all clients.

Today's reality is that "green nudging", changing people's behaviours towards green choices, is still at early stages. It has, by far, not yet resulted in any new economic norms. Therefore, motor insurers may need to take a balanced approach with any decarbonisation targets; they should not be too prescriptive to prevent innovation.

"Green nudging", changing people's behaviours towards green choices, is still at early stages. It has, by far, not yet resulted in any new economic norms.

AXA has set ambitions for the most material commercial and retail motor portfolios of AXA:

• By 2030, a reduction in the carbon intensity of the personal motor portfolio in selected geographies by 20%, using the baseline year 2019.
• An?increase of AXA’s green and sustainable claims by 10%.
• An increase the share of EVs and hybrids in AXA’s portfolio with offerings such as green insurance policies which may incentivize driving habits that are good for the environment.
• A decrease of the environmental impact of claims by using sustainable materials for repairs, reducing waste, and encouraging recycling.
• Education for AXA’s customers on sustainable mobility and the electric vehicles transition.

To achieve these targets, AXA has developed various products and services for its motor clients and more "nudging" will be required. From latest insights, the economic incentive needs to be tangible and at meaningful perceived value to drive our clients' choices towards "green":

• Carbon insurance: A novel way to insure excess emissions and claim voluntary carbon credits in case of unforeseen events that increase the carbon output of the vehicle.
• Eco-repair: A service that allows clients to repair their vehicles with recycled or eco-friendly parts and materials.
• Climate School: An online learning platform that enables companies to upskill and engage all employees in an online learning experience, made of 150+ microlearnings, fully customizable.

AXA has also partnered with companies like ClimateSeed, which provides premium carbon removal and avoidance projects. By insuring the transition to low-carbon mobility and engaging its clients in climate action, AXA aims to contribute to the global efforts to limit global warming. However, this also requires innovation, collaboration, and flexibility from all stakeholders involved in the motor insurance industry.

We need to rethink our consumption patterns, and adopt a more responsible and respectful attitude towards nature. We need to shrink our ecological footprint to a level that is compatible with the Earth’s biocapacity, and that allows us to live in harmony with ourselves, with others, and with the planet. Shrinking to greeness is not only a moral duty, but also an opportunity for positive change.

Mirjam Bamberger is member of the Management Committee of AXA's European Markets & Health. Prior to this she has been she has been?CEO of AXA Luxembourg and CEO of AXA Wealth Europe and served in various roles as a board member of AXA Switzerland. Mirjam spent over 20 years living and working in the US and UK, China, Latin America and Europe, holds an honors degree of the executive MBA of IMD Lausanne and a master’s degree of University of Cologne. She is a certified director of the Swiss Board School.

?