Women Can Drive Change in the Insurance Landscape
Globally, the socio-economic standing of women is transforming. Women are becoming more financially empowered, taking on greater responsibility in making decisions regarding wealth management, along with other personal and professional aspects of their lives. Consequently, this provides many opportunities for reshaping the insurance landscape in the country, a space where women traditionally showed less interest and involvement. This presents an opportunity for insurers to foster sustainable growth by exploring women's distinct needs and goals in various roles - customers, employees, entrepreneurs, family members, asset-holders, and investors - and offering tailored solutions.
According to the IFC’s SHEforSHIELD report, targeting women as customers could potentially yield up to US$1.7 trillion in revenue for the insurance industry by 2030. Despite the clear business case for introducing insurance products and services appropriate to their needs, it remains disproportionately low, indicating that insurers can do more to address gender disparities and serve the other half of the population.
To bridge the gap, insurers, along with distributors, insurtech firms, and other stakeholders, are developing a roadmap for creating strategies tailored to the women's market. They continue to focus on delivering straightforward, practical, and cost-effective initiatives that facilitate the development of personalised solutions for female customers, agents, and employees.
Let’s further look into the changes being brought in the insurance landscape:
Increasing market share
The potential for increasing women’s market share in the insurance landscape is substantial, fueled by several key factors. Globally, women command a significant portion, up to 75% of discretionary spending, indicating their considerable economic influence. Despite the challenges posed by the COVID-19 pandemic, more women have been engaging in education and entering the workforce, enhancing their bargaining power within households.
Moreover, a notable one-third proportion of small and medium enterprises worldwide are led or owned by women. However, these female entrepreneurs often face barriers such as limited access to capital and insufficient risk protection, hindering the growth of their businesses. By recognizing and addressing these dynamics, insurers are tailoring their offerings to meet the unique needs of women to expand their market share in the insurance sector. It involves developing products and services that provide adequate risk protection for female entrepreneurs and leveraging educational initiatives to enhance women's understanding of insurance benefits, ultimately fostering greater participation and engagement in insurance markets.
Higher cross-sell & loyalty
Women as potential customers in the insurance space can translate to higher cross-sell potential and enhance customer loyalty. Women's purchasing decisions often extend beyond themselves including insurance, and they frequently act as conduits for family members, including parents, spouses, and children. This characteristic creates ample opportunities for insurers to cross-sell multiple products, leveraging the inter-connectedness of familial relationships.
Additionally, women are renowned for their trusted recommendations and robust social networks, making them invaluable as customers and brand ambassadors. Their influence within their communities enhances the credibility of insurance providers and amplifies their reach. Moreover, studies consistently demonstrate that women exhibit greater loyalty to their insurance providers compared to men, displaying a reluctance to switch providers once they establish a relationship. This loyalty translates into long-term value for insurers, as it reduces churn rates and fosters enduring partnerships with female clientele.
Positive risk behaviour
The positive risk behaviour exhibited by women aligns with their focus on long-term sustainability and risk management, which is beneficial for insurers. Women generally display a heightened awareness of risks and prioritize achieving a balance between risk and reward, often emphasizing non-monetary gains over short-term profits. This prudent approach to risk management translates into lower incidences of fraudulent claims, as studies consistently demonstrate that women are less likely than men to engage in such deceptive practices.
Moreover, in sectors such as lending, women borrowers exhibit notably lower rates of non-performing loans, with statistics indicating a 53% reduction compared to their male counterparts. This reflects women’s conscientious financial behaviours and their propensity for responsible credit management.
By leveraging the positive risk behaviour of women, insurers mitigate fraudulent activities, minimize risk exposure, and enhance the overall profitability and sustainability of their operations.
Link to the family wallet
The insurance industry can benefit from women’s strong connection to the family wallet, a trend observed globally. Numerous studies consistently highlight that compared to men, women exhibit a greater willingness to allocate a larger portion of their income towards their family's welfare. This inclination reflects their deep-rooted sense of responsibility and commitment to ensuring the financial security and well-being of their loved ones. By recognizing and capitalizing on this link to the family wallet, insurers should develop tailored products and services that resonate with women's values and priorities, thereby expanding their market reach and relevance. Moreover, women's role as primary caregivers and decision-makers within households today positions them as key influencers in financial matters, including insurance purchases.
Ensuring equal access to insurance enables women to effectively address unexpected challenges, whether they stem from health issues or natural disasters, without having to compromise on essential expenses like food or education. This accessibility also fosters greater investment in livelihoods and small enterprises.
But let us first make them financially literate
Women constitute a significant potential market for the insurance industry's future growth, if business strategies are tailored to meet their needs and trust is established within key female demographics.
The insurance industry has an opportune business case to invest in innovative insurance products and delivery methods that empower women and female-led businesses. Recognizing the crucial role of technology in facilitating insurance access for women, it is imperative to complement these solutions with initiatives to enhance digital literacy and ensure financial consumer protection. These initiatives accompanied by measurable targets to track and expedite progress will prove transformational in the long term.
Rashmi Saluja is a doctor and an entrepreneur. She is an MBBS, MD, MBA (Finance), LLB and PhD by qualification and is the chairperson of Religare Enterprises Limited (REL)
