British insurers could replace written-off or stolen cars with electric vehicles, according to an industry trade body, as the sector plans to support the country’s drive to become net zero by 2050.
The Association of British Insurers' climate change roadmap plans to help customers make more sustainable choices during the claims process as it increases efforts to reduce emissions in the transport and property sectors.
“This could mean switching to an electric vehicle after a car is 'written off', or having a broken gas boiler replaced with a sustainable alternative,” the ABI said.
Customers will also be encouraged to accept repaired or recycled items as part of a settlement for damaged or stolen property, rather than brand-new items, the ABI said, with the association also investigating how items damaged during a flood or storm could be sent for re-use or repair.
The sector also plans to boost the development of a sustainable secondary market for electric vehicles and make re-using and recycling charging equipment “a consistent practice”, while savers will be educated on the effect of their investment choices on the environment.
“We all know the environmental crisis is the greatest threat facing our planet and all sectors need to challenge themselves like never before,” said Huw Evans, the ABI's director general.
“We accept that our sector’s emissions are amongst the most of any industry in the economy but, conversely, this means we are uniquely placed to drive the transition, including through huge investment potential in the green economy and our reach to millions of customers.”
Britain’s insurance sector employs 310,000 people in the UK, manages £1.6 trillion ($2.21 trillion) in invested assets and handles £46 million in claims every day.
Under the government’s Climate Change Committee’s sixth carbon budget, £2.7 trillion of investment is needed by 2035 to hit its net zero targets, with an independent study by Boston Consulting Group finding that ABI members could invest up to £0.9 trillion in UK transition opportunities over that time frame towards that figure.
That is equivalent to £60 billion a year, or a third of the money needed to meet the UK’s net zero target.
Mark Carney, the UK prime minister’s finance adviser for Cop26 and UN Special Envoy on Climate Action, said the country's net zero ambitions require a "whole economy transition" with every company, bank, insurer and investor adjusting their business models.
"ABI’s climate change roadmap highlights the need for near-term milestones on the transition to net zero; the business and investment opportunity from the transition for UK insurers; and the need for supportive public policy measures," Mr Carney said.
Cars that only rely on petrol and diesel will be banned in Britain from 2030, while hybrids will be stopped from 2035.
On Wednesday, the government said it will also ban the sale of new petrol and diesel lorries from 2040, under its new transport decarbonisation strategy, with plans to make domestic flights emissions-free by 2040.
The insurance sector's new green approach could help to eradicate petrol vehicles more quickly if every driver was offered an electric car when their old one became too damaged for repair.
Elon Musk’s Tesla Model 3 became Britain’s best-selling car model in June, as drivers accelerate the shift to electric and hybrid vehicles in line with the government's ambitions.
The electric-only Tesla model comfortably led the top 10 sales chart, with 5,468 new models registered last month, according to the Society of Motor Manufacturers and Traders, with the Volkswagen Golf in second place with 4,629 registrations, and the Ford Puma third with 4,477.
