Insurance - Travel


Ethical buying guide to travel insurance, from Ethical Consumer.

Ethical buying guide to travel insurance, from Ethical Consumer.


This is a product guide from Ethical Consumer, the UK's leading alternative consumer organisation. Since 1989 we've been researching and recording the social and environmental records of companies, and making the results available to you in a simple format.


We look at the most ethical travel insurance options
 

The report covers the major providers of travel insurance and includes:

  • Ethical and environmental ratings for 15 travel insurance underwriters
  • Best Buy recommendations
  • Tax avoidance

 

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Our ratings are live updated scores from our primary research database. They are based on primary and secondary research across 23 categories - 17 negative categories and 6 positive ones (Company Ethos and Product Sustainability). Find out more about our ethical ratings

 

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Last updated: April 2018 

 

 

 

Travel Insurance
 

The insurance industry is huge, not just in terms of sales each year. Insurers often hold vast investments in other companies, as we have explained in our home insurance guide. In the UK alone, insurance companies manage investments equivalent to around 25% of the country’s net worth.

This means that they are indirectly financing everything from tar sands to the sales of arms. In this guide, we have tried to find the travel insurance companies with the most ethical approach to investment.

 

Image: Skiing


 

Types of Insurance

 

There are two types of insurance company: brokers and underwriters:

Brokers sell policies on behalf of one or more underwriters, and include well known brands such as Sainsbury and the AA. They make money by receiving a commission from the underwriter, once a policy is sold.

Underwriters are the companies that take most of the money from an insurance premium, but which also pay out when something goes wrong. They may not be as visible as the broker’s insurance brand. But they wield a significant amount of power in the global economy. Insurers often holding vast investments in other companies, as we have explained in our home insurance guide.

This means that they are often indirectly financing everything from tar sands to the sales of arms. That is why we have focused on them for this report.

Just to make things more confusing, some underwriters do sell directly to the public, or belong to the same company group as the broker itself. Others may re-insure a specific risk via a different underwriter (basically insurance for the insurer).

 

 
 

What to look for?

 

In the UK alone, there are hundreds of brokers – too many to include in our reports, so our ranking tables only include underwriting companies.

Unfortunately, most of us will buy our policy through a broker, so you may have to do some extra digging. You can find the underwriter by looking at the ‘Key Facts’ document that the broker must provide when you are deciding to take out a policy. Comparison sights like Money Supermarket will also either provide these documents or tell you who the underwriter is.

Lloyd’s of London isn’t actually a broker or an underwriter: it is a marketplace where insurance managers can find capital to cover them. The capital is provided by Lloyd’s ‘members’ or ‘names’. Members were originally wealthy individuals, but now include corporate groups. Today, there are only around 290 individual members compared to 1760 of these corporate groups, which provide Lloyd’s capital backing. They come together to provide insurance, thereby pooling capital and spreading risk. All transactions are further underwritten by Lloyd’s own central fund.

One of the largest travel insurance underwriters is in fact a member of Lloyd’s marketplace. Travel Insurance Facilities underwrites travel insurance policies for the likes of the Post Office and Puffin Insurance. As a member of Lloyd’s of London, Travel Insurance Facilities is in part backed up by Lloyd’s of London’s central fund, and therefore by the policies (or lack of) that go with it.

 

 

How we rate companies

 

Several campaign groups have published reports about specific investments held by insurance companies (or the banks by which they are owned). We have marked down the companies named in these, and have included some more detail about the reports throughout the finance guides. Insurance companies appeared in Don’t bank on the Bomb, Unfriend Coal (see our home insurance guide); and Israel Report (see our current accounts guide).

We also looked for investments in specific companies, beginning with some of the largest in the UK and US such as WalMart, General Electric and Coca-Cola. Where the insurance company holds shares in, for example, a company criticised for pollution, it will also receive half a mark in the Pollution and Toxics column on the table. Most companies lost multiple marks in this way.

Where no ethical investment policy or shareholdings could be found for a company, it was assumed to have investments in companies criticised under all Ethical Consumer categories – as, sadly, is the norm in this industry. We also wrote to these companies to check there wasn’t a policy somewhere we hadn’t found.


 

Companies with an ethical policy on investments

 

A growing number of companies have some form of ethical policy on investments. But often these only exclude the most extreme players in a sector, for example those making cluster munitions or over 50% of profits from coal mining. We were looking for something a bit more robust, which crosses lots of sectors. Only one company in our pet insurance guide had this: The Co-op. We have included their ethical investment policy in the home insurance guide.

 


 

 

Table Highlights

 


Exemptions for those with full transparency on investments
 

Transparency around investments is rare in this sector. Very few companies publish shareholdings, let alone information about how they use them to steer those companies that they invest in. There was only one notable exceptions in our insurance tables: AXA. It scored ‘Top of the Pile’ for transparency (see our special report on the finance sector). As a market leader, sharing information on how it engaged with its holdings, we did not mark AXA down for its shares.

 

 

Tax avoidance
 

Tax avoidance is known to be pervasive in the financial sector, and the insurance industry appears to be no exception. Almost all those companies that had business abroad also appeared to have lots of high-risk subsidiaries registered in tax havens. Companies that got a worst rating for likely use of tax avoidance strategies lost a whole mark under Anti-Social Finance, and those that got a middle lost half a mark. The Co-op Group stood out as a FairTaxMark accredited company.


Best: Admiral, Direct Line, Esure, Liverpool Victoria, The Co-operative Group, 

Worst: AXA, Hiscox, J. C. Flowers & Co., Munich Re, NFU Mutual

 

 


 

 

 

 

Company profile

 

Mapfre is a key underwriter for travel insurance brokers. The Spanish company is 63% owned by the not-for-profit Fundación Mapfre. The foundation stretches across and varied and slightly random assortment of areas, listing its main focuses as: social action, culture, health promotion, road safety, and insurance and social protection.

Its work includes giving grants and awards to other charities, funding exhibitions and cultural publications, and leading programmes around areas like health and employment. 

 

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