Is it Right that Insurance Companies are Profiting from Smoking Twice?

A Canadian newspaper recently ran a story investigating how much insurance companies have invested in the tobacco industry. The June 5 issue of The Province found that Sun Life, a major Canadian insurance company, has a billion dollars invested with two tobacco companies. About $890 million of that is in Philip Morris. And the insurance industry as a whole has over four billion dollars invested in tobacco.

This brings up not only a question of business ethics, but of sending a mixed message to the public. Insurers have penalized smokers with higher rates for every type of insurance, and yet they continue to invest heavily in tobacco.

Clearly they place a higher value on profits, and obviously tobacco has been a steady producer of profits for investors of every size.

As long ago as 1995, we have known that insurance companies were rather heavily invested in tobacco. That is the year that Lancet ran an article on the subject. Insurers profit twice from tobacco: once from the higher rates charged to smokers, and again from their tobacco stock holdings.

The Province article also states that Prudential, which sells health and disability insurance, has $1.38 billion in two tobacco companies, including British American Tobacco (BAT).

Northwestern Mutual (NML), Massachusetts Mutual and the Scottish firm Standard Life also have large holdings in tobacco firms.

Do we as consumers have a right to criticize insurers for having these investments, whether or not we hold stock in the insurance companies? Or is tobacco such an old and traditional social vice that it is useless to rail against it? Remember that Prohibition against alcohol did not work.

We can simply choose to not invest in companies that invest in industries we do not want to encourage. We can simply choose to invest in green, sustainable industries and companies.

The article may be read at: http://www.theprovince.com/Health/Canadian+life+health+insurers+investing+heavily+tobacco+companies/1664704/story.html