Fight forequality

There is still a massive gender mismatch when it come to insurance take-up. Currently men take the lion's share of insurance. This may seem surprising given that, with the vast majority of insurance, women's premiums are lower than men's. However, the low take-up has far more to do with working lifestyles, financial product understanding and environmental marketing than price lead take-up.

In short, men are exposed to opportunities for buying insurance far more frequently than women. Traditionally this has been because a number of insurance schemes have been offered as employee benefits at work. In particular group private medical insurance (PMI) and group income protection (IP) have been offered as core employee benefits. Since there has been a demographic skewing towards the number of men working full time, IP has become a 'male' insurance.

Moreover, since more extensive employee benefits tend to be offered to senior employees, a tier dominated by men ' the insurance inequality tends to be greater. This massive gender bias has led to women having less access to group protection schemes than their male counterparts. Women are therefore underinsured compared to men.

The situation does not end there. IP is one of the few areas of personal finance where women get a worse deal than men ' annuities being the other main culprit. IP premiums are higher for women.

Higher risk

The fundamental reason behind this is that women are better at diagnosing ailments with long-term illness. Therefore their survival rates with critical or terminal illnesses tends to be much longer, meaning that insurance companies have to pay out for longer. This clearly makes them a higher risk prospect.

However, with premiums higher, insurers are making little progress with individual IP. So insurers are stuck with a demographic which is not taking up protection and with a product that is relatively expensive for this demographic.

So what can insurers do to encourage further take-up? Well, quite simply, a lot. They are also likely to be helped by passive means. Demographic and workplace changes ' in particular the rise of the number of women working and the rise of women at management level ' may drive take-up of group IP schemes.

However, this alone is unlikely to redress the balance. The key for providers is to encourage the take-up of individual IP schemes. It is the proactive measures which are likely to yield the greatest results. Indeed, one of the key perceptional barriers insurers must cover is one of cost.

Vital cover

The grand irony of insurance is generally, the higher the cost of insurance, the more likely it is the insurer will have to pay out. This disregards price differentials between insurers. Therefore critical illness (CI) cover being more expensive than life assurance reflects that a critical illness is more likely to occur, or that payouts are likely to be higher.

This means, theoretically, people should be more inclined to take out more expensive insurance, since this is more likely to happen to them ' the increased cost merely reflects the increased risk. This psychological barrier is a key one to overcome. How do you convince people that intrinsically, the more expensive a type of insurance, the more need there should be to take it out?

However, insurers need to engage this perception to increase IP take-up among women. The fact that women are likely to benefit from IP more than men is an essential selling point.

Equally more individual IP products need to be designed to reflect the working patterns of women. Mainstream individual IP products supposedly have the need for an income. With a number of women taking career breaks for motherhood, or working as housewives, there has to be a change in the structure of products to reflect these 'unpaid' working roles.

We have already seen the first moves into this market, with the launch of blue-collar IP schemes. These cover IP for 'any job' rather than a specific job and income. Many of these schemes launched have also used activities of daily living, in the same way as long term care insurance, to determine whether or not the policy pays out.

What is needed, however, is more IP schemes that reflect the vital work of women in the family. If women are unable to carry out domestic tasks, the cost of employing people to carry out these tasks could be considerable. Given the multi-faceted role most people carry out in domestic duties, many different people could potentially have to be employed.

Individual IP schemes specifically designed for this untapped market are likely to be more successful in raising awareness and take-up of this vital cover.

Another cause for marketing impetus is the rising cost of CI cover. Vastly improved diagnostics have led to much greater CI claims leading to a massive rise in premiums. This in itself is reducing the viability of CI cover for many individuals.

But in the absence of CI cover, the role of IP becomes more important. Individual IP has to be viewed as an alternative to CI, although ideally an individual would take out both. Since IP is less expensive than CI, it is far more attractive on a cost basis alone.

Moreover, the attraction of covering long-term incapacity through a bad back or stress is generally not covered by CI. Since these are the most common incapacitating ailments this provides a major selling point.

With further rises in CI premiums looking like the long-term trend, providers would do well to promote individual IP as a viable alternative.

Independent women

However, probably one of the greatest challenges for providers is in improving awareness among women. As society and lifestyle demographics continue to change, women are increasingly becoming independent and successful. This is leading to a greater need and desire for financial independence and understanding.

Insurers can, through numerous communications channels, engage and inspire women to the merits of sufficient protection. Indeed, such an undertaking is essential unless we are to see the rise of underinsured women who could, in the worst case scenario, see their lifestyle seriously damaged by long-term illness or incapacity.

What is needed is greater engagement on behalf of the entire financial community, not just with IP for women, but for the multifarious strands of financial advice for women. The importance of sufficient retirement planning, protection and investment must be a major focus as we start to see genuine workplace and lifestyle equality.

Indeed, the emerging women's market presents a fantastic opportunity for insurers to target and benefit from. Achieving this will require innovative and perspicacious solutions. New products will have to be devised, greater workplace marketing schemes created and awareness campaigns more finely targeted.

If the profile of financial planning for women is raised, this can only benefit the entire financial industry. The greatest beneficiaries, however, will be women. And this can only be considered a good thing. After all, as the long overdue equality in the workplace is finally achieved, it is high time women had equality in protection and financial security.

Charles Ansdell is technical manager at Inter Alliance