Enabling and investing in women entrepreneurship creates a multiplier effect and benefits future generations through disproportionate social outcome. According to IMF, investing in women builds economic and social prosperity for a nation by enabling a gradual social shift from high fertility, low education and poor health to conscious family planning, higher income and education to empowered choices.
It is estimated that 432 million women of working age are employed directly in India, and that 13.5 - 15.7 million women own businesses that employ 22 - 27 million people. As per data released by the Department for Promotion of Industry and Internal Trade (DPIIT), there were more than 50,000 new businesses in India in June 2021, with at least 45% founded by women. And today India is home to a new crop of entrepreneurs, category innovations and unicorns or near unicorns led by women honchos.
There is a parallel deep rooted dark reality however when it comes to the ‘fairer sex’ in the world of business. The pandemic may have been geo or socio-economic status agnostic, but it is not gender – blind. Covid-19 has exacerbated the inequalities women led SMEs (WSMEs) already face - having to balance work – family conflict and responsibilities, while also navigating the challenges of lack of access to credit, gender biases and inept education of finance and investing instruments, including insurance and risk protection.
And while the global insurance industry has made huge strides and continues to expand across emerging markets, women in general and especially entrepreneurs have largely been ignored. WSMEs are often poorly catered to, on account of being considered too costly or complex to deal with for relatively small premiums and/or an underserved market.
Without access to adequate insurance, women often resort to selling assets or taking loans to cover health-care costs or other expenses, hurting their ability to recover from setbacks. Another part of the challenge is that women look at insurance ‘as an expense rather than an investment.’ Further, women often own fewer assets because of inheritance laws, restrictions on land ownership, and divorce practices, as was also highlighted in the World Bank’s World Development Report on Gender Equality.
The tide is changing slowly but surely and the pandemic has highlighted the challenges and opportunities in an even greater measure. Despite persistent gender wage gaps, women today earn and own more than ever before. As more and more women increasingly join the formal workforce or become self-employed, their purchasing power increases, thereby strengthening the business and commercial case for tapping into women’s insurance market. By 2030, insurance companies are expected to earn up to $1.7 trillion from women—according to a study by IFC. Driven by an increased willingness to invest in safety, protection and security for their families, dependents and for themselves.
Fundamentally, women face a variety of risks and predispositions that are different from men’s and could be well-served. For example, risks shaped by longer life expectancies, pregnancy, and childbirth. They have a tendency to internalize gender stereotypes and their risk-awareness hinges heavily on the willingness to prioritize expenditures for peace of mind. They may prefer to choose low-risk business strategies to reduce downside potential, thus restricting their growth potential.
Insurers are beginning to take copious notes of the same and incorporate a gender lens into their strategy. The current suite of insurance products with a one-size-fits-all approach would need to be revised to building a deeper understanding of their specific risk and protection decisions. For instance catering to income protection or business interruption insurance for life events like childbirth.
The ‘Sheroes’ can also consider policies like income protection, key-person cover and family cover that will enable them to meet their financial commitments incase of a mishap. An owner’s health is the most paramount immaterial capital of a small firm and a health insurance policy is a must to protect against shocks or possibly even bankruptcy. For a reasonably larger set-up, group health insurance may help in attracting and retaining the talent as part of a valuable component in the total compensation. There is an entire gamut of insurance products including natural catastrophe, risk to property damage, liability and cyber security, supply chain risk, property or home insurance etc that can also play a key role.
Deploying new technologies coupled with a gender-sensitive approach offers great potential to grow and close the protection gap for WSMEs. These include training programmes aimed at sensitising and educating the sales staff on distinction between cognitive bias, which influences buying behaviour, and gender bias, which has constrained women's progress. For instance, women rely more on recommendations from trusted sources in their discovery, consideration and purchase journey, this could imply adopting a distribution approach focused more on referrals and community consultation. Maintaining and mining customer demographic data including gender specifics and custom targeted products will pave the way for inclusive policies. Recruiting more women as customer advisors will also enable better engagement and better understanding of female customers. As insurers become more inclusive in their approach, they are likely to be greeted with women clients that display both stronger loyalty and profitability.
There is an equal onus on women owners too to educate and equip themselves with the underlying need and benefits of anticipating and optimizing risk and redirecting efforts and funds towards growth and sustainability. Investing tenets based on Protection (of life, income, assets), Purpose (Goal based investing) and Product (Insurance/Equity/Debt based on lifestage, risk appetite, time horizons) will always hold in good stead and overall financial well-being.
To sum up, gender inclusion is both about social impact and business sense; but predominantly (according to IMF) investment in women strengthens economic development.
Sheena Kapoor is Head – Marketing, Corp Comm & CSR, ICICI Lombard.