by Mira KIRIDZIC-BÜGLER
Market Head Austria, Central & Eastern Europe, Swiss Re
Women entrepreneurs, like all business owners, face risks ranging from climate and natural catastrophe risk to property damage, liability and cyber security, supply chain risk and business disruptions. Insurance plays a key role in providing protection for their employees, their property and their income. As women's role in society is rapidly evolving, they have emerged to be, as specific segment, a business opportunity for insurers.
When discussing a topic, we usually begin with the big picture and get into the regional details afterwards. I would like to turn this around and start with a number of my own experiences as a female professional with a Central European background. I believe a regional dimension adds useful insights to the discussion about women as insurance decision-makers.
Let me explain. I grew up in Serbia, a country where women always worked full time. Part-time models were unheard of. When my first child was born here in Germany, my friends asked me how long I was going to stay at home and how many days a week I was going to work when I returned to the office. But for me, it was natural to go back full time, there was simply no other option. This is probably a cultural thing. And the majority of my friends from Eastern Europe, Spain and France share my views. I suppose it is because families were - and perhaps still are - very close, living to a large extent in the same city, with grandparents taking care of the kids. Another aspect might be the financial part - one salary just was not enough to make ends meet. Looking at the insurance industry and beyond, women always had a substantial share of middle-management positions in Eastern Europe. When it comes to insurance buying behaviour, I would differentiate between health/travel insurance, where women seem to be at the forefront, and life products, which are in stronger demand from male purchasers. It is difficult to explain why, but from my discussions so far, men traditionally appear to be taking responsibility for their families' long-term financial security.
Having said that, I can very much relate to the recent Swiss Re Institute research, which leads us to what I have termed the big picture:
Women's role in society has rapidly evolved over the last ten years. Now more than ever, they are breadwinners, entrepreneurs and leaders in the private and public sector. Therefore, insurers have a compelling reason to invest in understanding and incorporating the role of women as key decision-makers with regards to purchasing insurance.
Generally speaking, of course, basing decisions on alleged gender-specific behaviour could be an intellectually flawed process and open the door to bias. That being said, research has shown that women's buying preferences tend to contrast with those of their male counterparts. In a recent publication, Women as insurance decision-makers, Swiss Re Institute points out notable differences in insurance buying behaviour between men and women, especially when it comes to product focus and the purchasing decision funnel. For instance, women attach additional importance to recommendations from trusted sources in order to discover, evaluate and ultimately purchase new insurance coverage. For insurers, this could imply adopting a sales approach focused more on referrals and community consultation.
As for products, the Swiss Re Institute study suggests that women pay more attention to healthcare, especially for their children. But at the same time, they are less inclined to opt for life insurance, which makes them less prepared for their own mortality risk. They tend to be more loss averse than men, preferring safer investments at the expense of more attractive returns. Conversely, this 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
Bearing in mind such marked differences in buying behaviour, insurers potentially have an opportunity to proactively address the needs of women.
Access to capital is still difficult for female entrepreneurs
Women entrepreneurs have become increasingly important for economic stability. The US alone counts more than one million female-owned businesses, which generated USD 1.8 trillion in revenues and employed more than 10 million people in 2018. In Europe, women make up 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. So, it stands to reason that getting to grips with the challenges women entrepreneurs may face is going to help us better serve this customer segment.
What insurers can do
By better understanding women's needs, we can help strengthen them as important economic contributors. The Swiss Re Institute's report highlights three steps in this direction:
- Transforming the way insurance topics are communicated, demystifying insurance technicalities and bringing to the fore aspects that women value in industry literature.
- Redesigning distribution channels that will facilitate women's access to insurance as a complement to other forms of capital.
- Integrating attributes women value into insurance products with a particular focus on the risk management needs and preferences of women.
We will need to be aware of common misconceptions such as the distinction between cognitive bias, which influences buying behaviour, and gender bias, which has constrained women's progress. Insurance needs to be conscious of the opportunity we have to build a competitive advantage for the future consumer market by bringing to the industry female talent, with the ability to better understand and cater to the needs of female customers. Gender inclusion is both about social impact and business sense; and when there's impact, the business will follow.
These topics need investment in research, data analytics and management time. But if we can get just some of these themes right and put together a product suite that more proactively addresses the insurance and risk needs of women, the benefits will be tremendous. By 2029, a more gender-inclusive world could generate an additional USD 2.1 trillion of insurance spend for our industry. It could also create a global workforce that is more vibrant, resilient and inclusive.
Additional information: Women as insurance decision-makers | Swiss Re