As the world grows increasingly concerned about climate change and the effect it has on the planet, the health insurance industry in the UK has to consider its position on various planes.
The challenge is twice as important for the sector – not only does the industry like all others contribute to that change through emissions, but it is greatly impacted by the effect of climate change as it hits population health.
Encouragingly there is notable desire for improvement and action from many across the industry in the adviser and insurer markets, with challenging net zero goals set by many a key example.
However there are also opportunities yet to be taken such as greater participation from intermediaries, reporting transparency, supply chain engagement and product design that would further incentivise behaviours.
Rise of infectious diseases
The UK has aimed to be a world leader in addressing climate change, and hosted COP26 in Glasgow in 2021, but ambitious goals to achieve net zero status by 2050 look optimistic to some.
The global healthcare system itself is a significant contributor to carbon emissions, accounting for approximately 4% of all emissions, and so it too has an important role to play if that net zero goal is to be achieved on time.
Meanwhile, the UK is affected by global climate change despite its national efforts. As a result an increase in diseases, particularly those associated with warmer climes, is one of the dangers of climate change as the UK gets warmer.
According to the UK Health Security Agency (UKHSA) “many infectious diseases are highly climate sensitive, and with warmer temperatures we can expect an increased risk of new and emerging infectious diseases in the UK, including those transmitted through mosquito and tick bites.
“The impact of climate change on individuals will vary, with the worst effects on disadvantaged and vulnerable populations, which could widen health inequalities further,” it adds.
And the impact of climate change is likely to be costly to society and the NHS, increasing healthcare costs by billions in the years ahead.
The UKHSA says: “The total costs of heat-related mortalities from climate change and related socio-economic change in England have been estimated at approximately £6.8bn per year in the 2020s, rising to £14.7bn per year in the 2050s.”
Effects being felt now
But the UK does not have to wait to find out how climate change will transform lives, as the effects are already being felt as the UKHSA says winters will continue to become warmer and wetter, summers will become drier, and sea levels will continue to rise.
That can translate to increased claims for insurers, which can potentially drive up premiums and affect affordability.
But though health insurers may be hit by higher claims, they can also have a direct impact on climate change via their investment arms.
Insurers investments are responsible for trillions of pounds of funding, and every participant in the health and protection industry is responsible for the contracts they sign and services they work with
Health & Protection approached various players in the health insurance sector to understand how the industry is meeting net zero goals and cutting its impact on the environment.
But it is probably an area that is currently not being much consideration, as insurers and advisers alike concentrate more on the present and near future.
In fact, several of the UK-based advisers approached by Health & Protection declined to comment, citing a lack of expertise in this area, and perhpas this is a sign for greater pan-industry collaboration on the matter.
Despite this, some provided valuable insights and innovative ideas regarding the current state of sustainability within the sector and potential future developments.
And there was a recognition that many in the sector, particularly insurers, were giving far greater attention to the issue.
Net zero collaboration
One of those advisers to respond was Kristian Breeze, director of healthcare at Ascend Health, who acknowledged that the industry was moving in the right direction.
“The health insurance sector in the UK is increasingly recognising its role in addressing environmental sustainability, particularly in the context of net-zero goals,“ he says.
“Insurers, through their substantial investment portfolios, have a significant influence on environmental outcomes.“
Lifepoint Healthcare managing director Isaac Feiner agrees that the health insurance sector has a significant role to play.
“The industry is making progress, but achieving net-zero goals will require deeper collaboration, systemic innovation, and stronger accountability.”
He said the industry is trying to meet net-zero goals and to reduce its environmental impact via various main approaches.
That includes sustainable investments with insurers aligning portfolios with environmental, social and governance (ESG) principles, redirecting capital toward renewable energy and sustainable industries.
Rewarding healthy behaviours
And several insurers came in for commendation for the work they were doing to address climate change.
Howden Health & Benefits head of professional excellence Mark Waters says: “Our view is that the biggest successes we see, and this is not limited to any particular insurer, is where an insurer fully understands a client’s ESG objectives and priorities and is able to connect aspects of their proposition to those objectives and priorities, thus enabling the client to enhance those priorities and objectives.
“Further, propositions which include things like rewards for healthy behaviour, where the rewards can be converted into things like ESG-related initiatives, are well received and appealing.”
Climate and health emergency
Deepak Jobanputra, chief sustainability officer at Vitality has taken a great interest in climate change and its effect on health and recently spoke at the UN convened Global Sustainable Insurance Summit in Dublin.
At that summit he said: “We know that the climate emergency is also a health emergency and it is critical that we advance preventative risk measures to support a better world and contribute positively towards the UN sustainable development goals (SDG)s.“
And he tells Health & Protection one of the insurer’s values is to be a force for social good which includes sustainability and responding to climate change.
“One of the risks we face from climate change is the impact on health and given that part of our core purpose is to make people healthier, we are aligned to reducing the impact of climate change on health,“ Jobanputra says.
“This has been a part of our risk consideration for some time and something that we monitor holistically as part of our risk management framework.”
The damage that climate change can cause to people’s lives is a major consideration.
Jobanputra continues: “As a result, a key priority for us is a continued focus on prevention, supporting people to live longer and healthier lives, in turn using less healthcare, and becoming more resilient to the impacts of climate change.
“Given that the most engaged of our health members are less likely to be hospitalised, and have 28% lower claims costs, we can see the potential for us to have a bigger impact on resilience and risk prevention.”
Digital technology
Digital technology has been a key method of reducing the impact of climate change, including in providing treatments, and this has largely been welcomed by customers.
“Digital technology has provided us with opportunities to deliver care differently, helping to reduce carbon emissions by reducing travel and improving efficiency,“ Jobanputra says.
Another approach is operational initiatives where companies are working to reduce carbon footprints by digitizing processes, cutting paper usage, and adopting renewable energy in operations.
Vitality for its part has made a commitment to becoming carbon neutral by 2025 and net zero by 2050 or earlier, with its group net zero transition to be published by 2025.
Jobanputra adds that the changes and considerations are well underway “with almost 100% of our energy sourced through renewables and active measures taken to measure and manage down our main sources of emissions“.
Aviva
As for other insurers, Aviva gets top marks from Ascend Health’s Breeze.
He says: “Aviva stands out for its comprehensive approach to sustainability, having reduced its operational carbon emissions by 76% since 2010 and investing £6bn in green assets as of 2024.
“The company’s transparent reporting and clear targets serve as a benchmark within the industry.”
Feiner also had high marks for Aviva noting: “Aviva has committed to becoming a net-zero company by 2040, including sustainable investments through its Climate Transition Fund.“
Axa Health and Bupa
Feiner also recognised Axa UK, which he notes “has pledged to achieve net-zero operations by 2025, setting an ambitious benchmark.”
Bupa was another insurer receiving specific recognition.
Robbie Weston executive director of asset managment for Howden notes that although the firm does not currently have specific research on the subject, Bupa “has been quite forward in identifying links for climate events and health issues.”
Feiner agrees, saying: “Bupa has emerged as a leader in driving sustainability in healthcare.
“It has committed to becoming a net-zero business by 2040 across its global operations and value chain.”
He adds that the insurer is a standout for its comprehensive net-zero commitment by 2040, supported by tools that drive sustainability across the healthcare sector.
“Its efforts to reduce Scope 1 and 2 emissions by 46.2% by 2030 demonstrate clear, actionable leadership.“
Areas for improvement
But Feiner also highlights several areas for improvement across the sector, including a need for greater transparency and more supply chain engagement.
“Industry-wide, there is a need for more detailed and consistent reporting on progress toward net-zero goals,” he continues.
“Encouraging healthcare providers to adopt sustainable practices can amplify the industry’s impact.”
And there also needs to be more innovative products design Feiner says.
“Developing policies that incentivise eco-friendly behavior among employers and customers remains an underutilised opportunity,” he adds.
Concluding, Breeze is generally positive but admits there needs to be collaboration and regulatory support.
“The UK health insurance industry is making strides towards environmental sustainability, with leading firms setting ambitious net-zero targets and aligning their investment strategies accordingly,“ he says.
“Nonetheless, achieving comprehensive net-zero goals necessitates a balanced focus on both investment and underwriting practices, supported by clear regulatory frameworks to facilitate industry-wide collaboration.”