Insurers could replace written-off or stolen petrol cars with electric vehicles as part of a wide-ranging plan to improve sustainability.
The Association of British Insurers (ABI) said the plans could "herald a new approach" to the many thousands of claims settled each year.
Damaged gas boilers could also be replaced with more sustainable models.
Consumers would also be encouraged to accept recycled parts as part of a roadmap to tackle climate change.
Members of the ABI settled 2.6 million motor insurance claims last year, and 737,000 property claims.
The sector has been widely criticised for its approach on pricing, particularly rising premiums for loyal customers.
However, it believes it can have a significant impact on improving transport emissions and other environmental issues.
On Wednesday, the government unveiled its own green transport policy, although it was ridiculed by environmentalists.
The ABI's Climate Change Roadmap is a plan to get insurers moving towards a net-zero target. It reflects the huge range of sectors in which insurers operate.
It includes educating pension savers about their choices of investment, and the resulting environmental impact.
However. the most eye-catching aspect of the plan is the proposal that insurers should consider replacing written-off or stolen petrol cars with electric vehicles. Road transport is one of the heaviest polluting areas of society.
Insurers are also hoping to encourage the development of a sustainable secondary market for electric vehicles, and work on consistent policies for re-using and recycling charging equipment.
Customers may also be encouraged to accept repaired or recycled items as part of a settlement for damaged or stolen property, rather than brand new items.
They will also investigate how items damaged during a flood or storm could be sent for re-use or repair.
Huw Evans, director general of the ABI, said: "We all know the environmental crisis is the greatest threat facing our planet and all sectors need to challenge themselves like never before.
"We accept that our sector's emission 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."