Cultural evolution

Gender equality is often thought of as a women’s issue, but many senior business leaders will argue that it is a societal issue that has implications for us all.

“The business case for gender equality has been made,” says Inga Beale, highlighting the array of studies detailing the benefits of greater equality to business and the global economy.

The former chief executive officer of Lloyd’s of London, who is now leading her own company, Noringa Consulting, is not wrong. Ongoing research from McKinsey shows that the business benefits of equality range from stronger financial performance to greater innovation.

McKinsey’s “Delivering through Diversity” report, published in January 2018, showed that companies in the top quartile for gender-diverse executive teams were 21 percent more likely to outperform on profitability and 27 percent more likely to have superior value creation.

For firms that don’t take diversity seriously, the report had a stark warning. McKinsey found that overall, companies in the bottom quartile for both gender and ethnic/cultural diversity were 29 percent less likely to achieve above-average profitability than all the other companies in the dataset. Not only were they not leading, they were lagging.

From a macro perspective, PwC’s March 2019 Women in Work Index shows that improving female participation in work across the Organisation for Economic Co-operation and Development (OECD) countries could boost gross domestic product (GDP) in those nations by $6 trillion; losing the gender pay gap alone could boost GDP by $2 trillion.

However: “While progress on representation is perceptible, the pace of change remains disappointing,” says Vivian Hunt, managing partner, UK and Ireland at McKinsey, in the latest Hampton-Alexander Review published in November 2019, which focuses on increasing the number of women on FTSE boards and in senior positions.

Beale adds: “There’s going to be increasing social pressure from people, either as consumers or as employees, who want to see that there is fair representation of the communities they are from or communities overall. The next generation are going to be demanding it.”

New approaches
The evidence to support a push for greater diversity and gender equality is there and these studies are just a small sample of the wealth of research out there, so what action can insurers take?

One programme taking a novel, holistic approach to financial gender equality is the Insuring Women’s Futures Programme (IWF). It aims to bring about change and highlight opportunities for the re/insurance sector in the process.

Led by the Chartered Institute of Insurance (CII) in collaboration with sector experts, IWF conducted analysis over three years to produce a joined-up action plan that aims to lift everybody in society.

Jane Portas, partner at PwC and lead author of the IWF manifesto, explains that the research focuses on women’s financial life journey in the UK. The report identifies a series of life risks—or perils and pitfalls—that have financial implications for women.

“One of the key life risks relates to the gender pay gap, which is a measure of the gender diversity in roles within employers,” she says.

The gender pay gap in the UK is currently 9 percent on average, but Portas highlights the 21 percent pay gap between male and female apprentices, which is a result of gender stereotyping—a disproportionate number of girls opt to work in lower-paid sectors.

Portas says there is a similar pattern for female graduates, with threequarters gaining a 2:1 degree or higher, yet fewer studying the subjects that will lead to higher paid jobs in the future. For example, only 33 percent of girls consider themselves best at science, technology, engineering and mathematics (STEM) subjects compared to 60 percent of boys, which affects their career choices and earning potential later on.

Flexible working is another area where women can lose out: 28.5 percent of mothers with a child aged 14 and under said they had reduced their working hours due to childcare. In contrast, just 4.8 percent of fathers reduced their hours. Women working part-time earn 30 percent less per hour than full-time working women, resulting in a gender pay gap of 18 percent, double the gap for full-time female workers.

Reduced hours also lead to a smaller pension pot, but three out of 10 women did not recognise this. Overall the pensions of women working part time are 47 percent lower than men’s by the time they reach 60.

Portas says: “The perils and pitfalls women face are all ultimately connected back to a lack of inclusion on a gender level, in terms of the choices that are made early on in life but also in terms of the progression of women in the workforce.

“The report shows that we need to stand back and look at life journeys and understand that there are differences in the journeys between men and women.

“If we’re going to tackle this challenge around gender inclusion more broadly in our society then we need to look at that holistically across the life journey. Then we can use a combination of what I call policy and practice business and society to make interventions.”

The report sets out women’s financial life journey with six ‘moments that matter’ that can make a difference to future financial resilience. They range from study choices to starting work, being a professional mother and a carer, on to retirement.

Each ‘moment’ is brought to life with personas that people will be able to identify with either personally or recognise as members of their family, friends or colleagues.

The report lays out recommendations for insurers, the wider financial services profession, government, regulators, trade bodies and society to take action.

For example, addressing the financial penalty women face around flexible working, Portas says that employers can embrace a range of financially inclusive work patterns while also enabling financially rewarding careers. This is something re/insurers can do as employers, which also helps to attract and retain talent, something that is becoming tougher as the tech companies vie for the attention of the brightest and best.

When it comes to women as customers, the sector has an opportunity here, too. IWF says women are exposed to risks that are different from those of men, and are typically less likely to buy certain products such as life insurance or long-term care. There is an opportunity to explore new ways of better serving their needs, and the report recommends that insurance and pension providers adopt a ‘whole customer’ approach.

In the past, a standard household insurance policy would have been for a heterosexual married couple, Portas explains.

“This may not hold in the future if we’re going to have multi-family or multi-generational living, so what does that mean for the insurance policies we design for tomorrow?

“What does the fact that mothers are having babies much later in life mean for the type of protections we will offer people in the future?” she says.

The research shows that 52 percent of women and 49 percent of men who are married or cohabiting do not consider their relationship life circumstances when setting up their insurance policies. Two-fifths of women and 33 percent of men are unaware or not sure of the different implications this might have for making a claim.

“Life is changing dramatically, which means people’s risks in life and their financial lives are changing dramatically. This then becomes both a need and an opportunity to think about customer approaches, in terms of product design but also customer journeys,” Portas says.

The IWF’s recommendation is that insurers help customers to be the most informed they can be when they are taking out insurance products and that they think about that in the context of their financial lives.

These are just a few of the recommendations in the detailed report; some will take longer to implement than others.

Support
Sian Fisher, chief executive officer of CII and IWF executive chair, says that one of the quick wins for insurers is to sign up to the IWF pledges to support financial flexible working and inclusive customers’ financial lives.

“The idea is that companies can sign up to the concept that you should be treating customers in a way that works for them thinking about their life circumstances, which is something that doesn’t get much emphasis.

“On the other side, if you’ve got women as employees and they’re subject to the same things as women in society, if you want to encourage diversity and inclusion in the workplace, then you’ve got the double win that you can think about customers and think about your own employees in the same way,” she says.

Fisher adds that most medium-sized companies now have a diversity network.

“We’re saying ‘work with us’ to these diversity networks because IWF now gives you something to work with your employer on.”

One example Fisher highlights is for employers to advise all female employees who are going on maternity leave to sign up to the child benefit so they don’t lose out on pension contributions, which reduces their overall pension fund.

Men are vital in improving gender equality. Fisher says that one of the most effective ways to engage men with IWF and other programmes is to get them to think about their own families.

“If someone thinks there is full equality, ask him what subjects his daughter is doing at school and what is that likely to lead to as a career?”

She adds that one of the pitfalls that often gets men thinking is whether their wives have registered for child benefits and the negative implications of not doing that for their pensions.

“A lot of them don’t realise that they might be losing something through that.”

Portas adds: “Society is still catching up in terms of acknowledging the gender pay gap. Nearly 50 years since equal pay was introduced, just 57 percent of men and 78 percent of women think gender pay inequality is very wrong and only 43 percent (38 percent of men and 48 percent of women) think it is wrong for the average earnings of men to be higher than women’s.”

These stubborn societal attitudes also play out in how people behave at work. Beale points to ‘micro-aggressive’ behaviours that stop people feeling they belong in the organisation. A common example can be stereotypical or derogatory views expressed as casual sexism.

“Micro-aggression is the latest hot topic; trying to understand the behaviours that put people off wanting to stay in the business,” says Beale.

“The insurance sector is doing better at recruiting and appealing to women, but we’re not doing so well at keeping them. It’s a behavioural thing that is also in broader society when I hear some of the stories. I do get concerned that we have a way to go.”

The efforts of Lloyd’s of London to tackle the “laddish” culture that led to complaints of sexism and harassment have had a high profile in the past year, including its ‘Speak Up’ campaign to call out bad behaviour.

Beale does not comment directly on her former employer but says: “In any physical market, things are accentuated. There’s an amazing cluster effect in insurance in London and in the Lloyd’s market, whereas if you think about banking or insurance in other countries you don’t have this physical gathering of people. It gets more intense.

“But poor behaviour or traditional types of behaviour that we’ve been used to are no longer appropriate. They’re very prevalent in many workplaces, it’s a far-reaching issue.

“I feel optimistic because more consulting is happening on diversity and inclusion. I’m amazed by the number of people, both men and women, who want to do something about it, and firms are spending money on it. There is enough activity going on that it is going to make a difference.

“It feels very different from say five years ago in insurance. We’re having conversations about it and we didn’t five years ago, it is as simple as that.”

Portas adds that while the gender pay gap is not expected to close until 2050, and pensions parity is quite a lot further off, “more needs to be done to accelerate the change”, something that is important for society as people in the UK move towards living for an average of 100 years.

She points to the UK’s aging population, and the rise in pensioners compared to people of working age. Women will make up a greater proportion of pensioners as they have greater life expectancy than men.

“IWF is an important societal issue that we need to tackle. And we need to do it for the future of the next generation.

“It isn’t just a women’s issue, it is a societal issue. We are creating a challenge for future generations if we don’t address this.”

Insuring Women’s Futures Programme: www.insuringwomensfutures.co.uk/