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The USD 2.1 trillion insurance opportunity

The pandemic has taken its toll on all of us. Uncertainty, isolation, emotional distress, financial and health concerns for self and others were the recipe for derailing the mental health of even the strongest minds. A particular segment, however, has felt it harder: women in the workforce.

One notable study by the Harvard Business Review1 early in the pandemic found that, while women make up 39% of global employment, they accounted for 54% of COVID-related job losses. This implies women’s jobs were 1.8 times more vulnerable than men’s during the pandemic.

Over the past years, we, collectively as a society, have worked together to address gender equality by ensuring we make our global economy more gender inclusive. Prior to COVID-19, a McKinsey study2 had found that women attrition rates in the US workforce had not only improved in the prior 5 years but were lower than those for men at that point in time.

The COVID-19 crisis, from which we're still emerging, unfortunately has set some of these achievements back by several years and, frankly, in some countries, by generations. Tackling this challenge is in our best interest to nurture economic growth and build societal resilience. It also represents a fundamental opportunity for our industry.

The role of women in society has rapidly evolved in the past decade. Today, more than ever, they are breadwinners, entrepreneurs and leaders in the private and public sector.

For the insurance industry, it's therefore particularly relevant to invest in understanding and incorporating the role of women as key decision markers when it comes to insurance purchase.

Why does that matter?

Women buying preferences differ significantly from their male counterparts'. Recent research by the Swiss Re Institute point out notable differences in insurance buying behaviour from a gender lens, especially when it comes to product focus and the purchasing decision funnel. For instance, women put additional value on recommendations by trusted sources in order to discover, evaluate and ultimately purchase new insurance products. For insurers this could mean a sales approach focused more on referrals and community consultation.

As for products, the study suggests that women are more focused on healthcare, especially for their children, but at the same time they are less prone to buy life insurance, which makes them less prepared for their own mortality risk. They're more loss averse than men, preferring safer investments at the expense of greater returns. This conversely means less focus on retirement savings, making women less prepared for the longevity risk.

Distinct behavioural differences observed between men and women

Source: Swiss Re Institute research

Considering these significant differences in buying behaviour, the insurance industry has an opportunity to proactively address the needs of women.

The funding gap

Over the years, women entrepreneurs have become an increasingly important pillar for economic stability. The US alone counts more than one million female-owned businesses, which reported USD 1.8 trillion in combined revenues and employed more than 10 million people in 2018. In Europe, women represent 30% of start-up entrepreneurs, while Asia is home for 40% of the world's female-owned businesses.

Yet, despite producing higher revenue per dollar invested, access to capital remains a challenge for women. Insurance can help de-risk their businesses to expand their funding capabilities, while also providing them risk coverage for their business operations and the people they employ. Understanding the challenges women entrepreneurs may face helps us better serve this customer segment.

The win-win approach

By better understanding the needs of women we can help them grow as an important contributor and solid pillar of our economic landscape. The Swiss Re Institute's report highlights three steps we can take as an industry to start driving this change:

  1. Promote financial literacy: transform the way insurance topics are communicated, demystify insurance technicalities and bring to the fore aspects that women value in industry literature.
  2. Adapt distribution: consider the specialized distribution channels that will facilitate women's access to insurance as a complement to other forms of capital.
  3. Product design tailored to women: integrate attributes women value into insurance products with a particular focus on the risk management needs and preferences of women.

I've recently had the privilege of hosting a panel discussion with Valentine de Lasteyrie, CEO at Albingia, Costantino Moretti, Head of International  Insurance at Admiral Group and Muna Sukhtian, Managing Director of Microfund for Women (MfW), three bright minds and thought leaders committed to this important topic. Our discussion made clear that to progress in this field we will need to keep mindful of common misconceptions such as the distinction between cognitive bias, which influences buying behaviour, and gender bias, which has been constraining women's progress, as Valentina pointed out; Constantino reminded us that we need to be conscious of the opportunity we have today to build a competitive advantage for the consumer market of the future by bringing female talent to the industry whom can better understand and cater to the needs of female customers. Lastly, as Muna righteously said, gender inclusion is both about social impact and business sense; and when there's impact, the business will follow.

The upside

These topics will all require investment in research, data analytics and management time. However, if we can get even some of these themes right and build an offering that more proactively addresses the insurance and risk needs of women, the upside is tremendous. By 2029, a more gender-inclusive world could mean an additional USD 2.1 trillion dollars of insurance spend for our industry. More materially, it would create a global workforce that is more vibrant, more resilient and more inclusive.

Again, the pandemic has been very hard for everyone. But we know it's been particularly hard on women, as they accumulate the tasks of entrepreneurs, breadwinners, household managers, mothers and companions. As an industry we can continue to act to make our workplaces more inclusive and diverse. However, if we can create an insurance environment that truly addresses the growing desires, needs and opportunities of women, we can bring transformative change to society.

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