A place for a purpose? Recasting insurance through a female lens

Does the insurance industry provide opportunities for “targeted” entrepreneurs to drive social change? Sam White, CEO of Stella Insurance thinks so. She’s trying to build a brand that directly addresses women’s concerns about issues ranging from inappropriate coverage levels to industry practices that ignore the dangers of domestic violence.

At first glance, car insurance is in any case an almost gender-neutral product. Yes, women tend to drive safer than men, so in theory they should pay less for their car insurance. But unfortunately, here in the UK and across the European Union, equality laws currently prevent insurers from basing their pricing policies on gender alone. Despite a lower accident rate, women do not enjoy a discount on policies.

That fact has presented Sam White with an interesting challenge. Based in the UK, she is the founder and current chairman of insurance company Freedom Services, but when she decided to launch a brand that would be openly aimed at women, she initially chose Australia – a country where policies can be priced by gender – as a launch pad. She brought the Stella Insurance brand to the UK late last year. When I spoke to her last week, I was eager to learn how she plans to build a business that specifically appeals to women, when perhaps the biggest potential selling point – lower costs – is not something that can be brought into play.

Born in Cheadle in the north of England, White began her entrepreneurial career with a claims management business launched from her sister’s conservatory. She stayed with insurance and then founded the Freedom Services Group, which launched Stella Insurance in Australia in 2020 in partnership with Bauer media group, Adder Capital and VC, invest.

As she explains, Stella is not only positioned as female-centric, but also as a company with a social mission. “Purpose-driven companies have the power to change the world,” she says.

But what does that actually mean in the context of the insurance industry? Let’s face it, few of us consider buying auto insurance anything other than an uninspired essential. We buy policies to protect ourselves and others and to comply with the law and most of us probably use comparison engines and try to pay as little as possible. So, where does purpose fit into that picture?

A female lens

White’s approach is to look at the market through a female lens. According to her, the needs of women are not well met. She cites home contents insurance as an example.

“Traditionally, coverage for content carried in cars hasn’t been high enough,” she says. “It doesn’t reflect the value of goods women carry.”

Then there’s the question of the kinds of interactions women enjoy – or more to the point – dislike. “Women don’t like being asked all sorts of questions that aren’t necessary to price coverage, but because the information can be used in the future,” she says.

Loyalty penalties — the practice of making long-term policyholders pay more on renewal than those who sign up for the first time — are also disliked by women, though White admits it’s something the industry has already addressed.

So there is room to do more to match the offerings with women’s expectations, even if price is not taken into account. Of course, you could say that this is just good marketing – or put another way, tailoring a product to the preferences of a target consumer. That probably doesn’t meet a ‘target definition’.

Deeper problems

But White points to more fundamental problems with auto insurance, as it is marketed to women. She points to policies that deny claims if damage to a vehicle was caused by someone known to the claimant. On the surface, this sounds like a pretty standard industry opt-out. But what if the plaintiff is a woman suffering from domestic violence? Then it’s a problem.

This is something White wants to target. At the same time, the company has developed a product – which can be embedded in car insurance policies – that pays out in case of domestic violence. “If you’re a victim, you can get money,” she says. It is a lump sum payment of between £2,500 and £5,000, based on a domestic violence order.

In addition, in Australia, Stella has donated $5 (Australian) to the Emergency Center Women and Girls. Here in the UK, the company has teamed up with the Flyaway Foundation to help women break the cycle of abuse. White sees this as an important part of the company’s ethos, even if it means slightly lower profit margins.

Increase capital

So how does this all sound for lenders? Until Stella’s launch in Australia, White grew her business organically rather than seeking VC funding. Yet she has seen with her own eyes the problems women face when they want to raise capital. During the time of her first company, her father had to pose as a director to help her get a loan.

But doesn’t positioning it as a company with a “purpose” make things more difficult, if only because it confuses investors or lenders? White says a commitment to a goal shouldn’t be a deterrent. “A company without a target element can have an EBITDA of £130 million. An equivalent targeted company could report £100 million. But that’s still £100 million.” In other words, you can anchor the goal and still deliver good grades. “I believe in Stella and my grades are good,” adds White.

So can the purpose-driven concept gain a foothold in the insurance industry? Well, as the industry itself evolves – embracing big data and AI for pricing and assessing claims – there are at least opportunities to think creatively and put the customer first. Major insurers may be determined, but there is room for entrepreneurs to find ways to better serve their target markets.