Women and Insurance: A Path to Financial Freedom

Yesterday was International Women's Day, a perfect time to reflect on the importance of financial security for women. Despite significant strides toward gender equality, women still face unique financial challenges that can impact their long-term security. From wage gaps to career breaks for caregiving, these hurdles make it crucial for women to have robust financial plans. Insurance plays a pivotal role in offering a safety net that can protect against life's uncertainties and provide peace of mind.

The insurance protection gap for women is not just significant, it's urgent. In the U.S., only 47% of women owned life insurance in 2021, compared to 58% of men. In the Asia-Pacific region, only 51.9% of women receive social protection benefits compared to 58.2% of men. Additionally, less than a third of working-age women contribute to old-age pensions, meaning many will depend on low-benefit, tax-financed pensions or no pension when they reach retirement age. This gap highlights the pressing need for tailored insurance products that address women's risks and financial needs.

"Financial security is not just a necessity; it's a right that empowers women to live their lives with confidence and independence."

The Power of Insurance in Empowering Women

Insurance can empower women by providing financial security and stability, especially in times of crisis. Life insurance, health insurance, and disability insurance are essential tools that can safeguard against unexpected events such as illness, job loss, or the death of a breadwinner. For instance, having adequate life insurance ensures adequate financial protection for a woman's family in the event of her untimely death. In contrast, health insurance can cover medical expenses that might deplete savings.

Insurance provides a lifeline for women to raise their families and children after the death of a breadwinner. It ensures that the financial support continues, covering daily living expenses, maintaining the family's lifestyle, and funding future goals like children's education. For example, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) in India provides life insurance coverage to women, ensuring their families are supported financially in case of their demise. Similarly, in Bangladesh, the Grameen Bank offers micro-insurance products tailored to women, helping them manage risks and secure their livelihoods.

Insurance also helps women save for their old age and other life cycle needs. Even if women save, insurance products can better channel these savings and offer higher returns and additional benefits. For example, the Sukanya Samriddhi Yojana in India is a savings scheme specifically designed for the girl child, providing attractive interest rates and tax benefits.

Women tend to live longer than men, with a life expectancy of 81 years compared to 76 years for men in the U.S. This fact makes it crucial for women to have access to retirement income to ensure financial stability in their later years. In the U.S., women have approximately 30% lower income in retirement than men.

"Insurance is a lifeline that ensures women can continue to support their families, even in the face of life's uncertainties."

Challenges and Opportunities in Developing Bespoke Products for Women

The insurance industry faces several challenges in developing products tailored to women's unique risks. Insurance has historically been male-dominated, and while designing and developing insurance products. Many have not kept women's specific needs in mind. Women are often seen as riskier and charged higher premiums, particularly for health insurance. Non-working women may struggle to buy insurance policies, as the sum assured is usually limited to half of their husband's income. Single women, especially those working in the gig economy, also face challenges such as income instability, lack of social protection, and discrimination.

For example, in India, many insurance policies do not cover maternity leave or fertility treatments, leaving women without adequate support during critical life stages. In Japan, however, women's insurance agents have transformed the life insurance market by offering products that cater specifically to women's needs, such as policies that cover breast cancer and other women-specific health issues.

In other countries, such as Kenya, the Linda Jamii microinsurance program provides affordable health insurance to low-income women, including those in the informal sector. In the Philippines, the CARD MRI group offers microinsurance products that cover a range of risks, including death, disability, and natural disasters.

Illiterate women and informal workers face unique challenges in accessing insurance. Many are unaware of its benefits or find the process too complex. To address this, organizations like SEWA (Self-Employed Women's Association) in India provide financial literacy programs and simplified insurance products tailored to the needs of informal workers.

Climate and disaster risk products are also popular for protecting income, assets, and lives. For example, in the Philippines, microinsurance products cover natural disasters, ensuring that women can rebuild their lives after such events. In Bangladesh, the Oxfam-led project provides climate insurance to protect women farmers from the financial impact of climate change.

A significant issue in the insurance industry is the problem with nominations. Nominations are a crucial aspect of insurance, as they determine who will receive the insurance benefits in case of the policyholder's death. However, often, purchasers do not fill in the nominee details; if they do, the details are incomplete, or the nominee is not informed. These prevailing practices lead to unclaimed insurance benefits, as women may not know whether their husbands have purchased insurance. There are many unclaimed life insurance funds in India due to missing nominee details. Therefore, it's important for women to be aware of the nomination process and ensure that it is correctly filled to secure their financial future.

Women are not just a significant component of the gig economy, they are its backbone. Yet exploitation prevails, with insurance benefits usually being denied. In the U.S., 47% of female workers work freelance or gig. However, only 16% of gig workers have access to retirement plans, and women in the gig economy make 10.5% less than their male counterparts. This lack of access to benefits and income disparity highlights the urgent need for better insurance solutions for women in the gig economy, solutions that are inclusive and fair.

"Creating bespoke insurance products for women is not just about fairness; it's about recognizing and addressing their unique needs and challenges."

The Role of Femtech and Insurtech

Femtech, which encompasses technology solutions tailored to women's health, and insurtech, which leverages technology to innovate in the insurance sector, play transformative roles. Femtech products, such as fertility trackers and health monitoring apps, can provide valuable data that insurers can use to create more personalized and relevant insurance products. Insurtech, on the other hand, uses technologies like AI and big data to improve risk assessment and streamline claims processing, making insurance more accessible, efficient, and promising for the future.

For instance, companies like INZMO and Lukango leverage insurtech to offer flexible and affordable insurance solutions tailored to women's needs. INZMO, based in Berlin, provides zero-deposit solutions for renters, making it easier for women to secure housing without the financial burden of a large deposit. Lukango, a UK-based insurtech, offers insurance services to micro businesses and sole professionals, leveraging data and smart algorithms to provide flexible coverage that can adapt as businesses grow.

Technology also plays a crucial role in onboarding women customers. Automated processes and AI-driven solutions can simplify onboarding, making it easier for women to understand and purchase insurance products. However, bundled products have unintended consequences. Often, purchasers do not fill in the nominee's details; even if they do, the details are incomplete, or the nominee is not informed. This practice can lead to unclaimed insurance benefits, as women may not know whether their husbands have purchased insurance.

"Technology is revolutionizing the insurance industry, making it more inclusive and responsive to women's needs."

Governance and Representation: Women at the Helm

The insurance industry needs more women in leadership roles to drive meaningful change. Women bring unique perspectives and insights that can help create more inclusive and equitable insurance products.

Globally, companies with more women in leadership positions have been shown to perform better financially and have stronger governance. Policymakers, regulators, and the insurance industry must work together to promote gender diversity and ensure the representation of women at all levels of the industry.

"Diversity in leadership is not just a goal; creating a more inclusive and equitable insurance industry is necessary."

Need for a Forward-Looking Perspective

As we celebrate International Women's Day, it's essential to recognize the critical role that insurance can play in empowering women and ensuring their financial security. By addressing women's unique risks and leveraging the power of Femtech and Insurtech, the insurance industry can create fairer, more inclusive products, benefiting women and contributing to a more resilient and equitable society. Policymakers and regulators should implement policies that promote gender equality in insurance and encourage the development of products tailored to women's needs. Insurance companies need to innovate and create bespoke insurance products that address the unique risks faced by women. Women should take proactive steps to understand and invest in insurance products that provide financial security for them and their families.

"Empowering women through insurance is not just about protection; it's about creating opportunities for a brighter, more secure future."