Does the insurance industry offer opportunities for “purpose-driven” entrepreneurs to drive social change. Sam white, CEO of Stella Insurance thinks so. She is seeking to build a brand that directly addresses the concerns of women across issues ranging from inappropriate levels of cover through industry practices that ignore the dangers of domestic abuse.
On the face of it, at least, motor insurance is a pretty-much gender neutral product. Yes, women tend to drive more safely than men so, in theory at least, they should pay less for their car insurance. But sadly, here in the UK and across the European Union, equality laws currently prevent insurers from pricing policies on the basis of gender alone. Despite a lower accident rate, women do not enjoy a discount on policies.
That fact has posed an interesting challenge for Sam White. Based in the U.K., is the founder and current chair of insurance company, Freedom Services but when she decided to launch a brand that would be avowedly female-centric in its approach, she initially chose Australia – a country where policies could be priced according to gender – as the launchpad. At the end of last year, she brought the Stella Insurance brand to the UK. When I spoke to her last week, I was keen to find out how she intends to build a business that speaks specifically to women when arguably the biggest potential selling point – reduced cost – is not something that can be brought into play.
Born in Cheadle in the North of England, White started her entrepreneurial career with a claims management business launched from her sister’s conservatory. Sticking with insurance, she went on to found the Freedom Services Group, which in 2020 launched Stella Insurance in Australia in partnership with Bauer Media Group, Viper Capital and VC, Envest.
As she explains, Stella is positioned not only as female-centric but also a business with a social mission. “Purpose-driven businesses 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, very few of us think of buying car insurance as anything than an uninspiring essential. We buy policies to protect ourselves, protect others and stay in compliance with the law and most 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. As she sees it, the needs of women haven’t been particularly well catered for. She cites car contents cover as an example.
“Traditionally, the cover for contents carried within cars hasn’t been high enough,” she says. “It doesn’t reflect the value of goods that women carry.”
Then there is the question of the kind of interactions that women like – or more to the point – don’t like. “Women don’t like being asked all sorts of questions that aren’t necessary to price the cover but are being asked because the information can be used in the future,” she says.
Loyalty penalties – the practice of charging long-standing policyholders more on renewal than those who sign up for the first time – are also disliked by women, although White concedes this is something that has already been addressed by the industry.
So there is scope to do more to align the offer with the expectations of women, even with price taken out of the equation. You could argue, of course, that this is simply good marketing – or to put it another way, tailoring a product to address the preferences of a target consumer. That probably falls well short of a “purpose definition.”
Deeper Problems
But White points to more fundamental issues with car insurance as it is sold to women. She points to policies that repudiate claims if the damage done to a vehicle is done by someone who is known to the claimant. On the face of it, this sounds like a fairly standard industry opt out. But what if the claimant is a woman suffering from domestic abuse? Then its a problem.
This is something that White has set out to address. At the same time, the company has developed a product – which can be embedded in car insurance – that will payout in the event of a domestic abuse situation. “If you are a victim, you can get funds,” she says. It’s a fixed sum of between £2,500 and £5,000, with the trigger being a domestic abuse order.
In addition, Stella in Australia has donated $5 (Australian) to the Women and Girls Emergency Centre. Here in the UK, the company has partnered with Flyaway Foundation to help women break the cycle of abuse. White sees this as an important part of the ethos of the company, even if it means slightly lower profit margins.
Raising Capital
So how does all this sound to financial backers? Until the launch of Stella in Australia, White has grown her business organically rather than seeking VC finance. Even so, she’s seen at first-hand the problems women have when they seek to raise capital. Back in the days of her first business, her father had to pose as a director in order to help her secure a loan.
But doesn’t positioning as a “purpose” business make things harder, if only because it confuses investors or lenders? White says a commitment to purpose needn’t be a deterrent. “A company without a purpose element might have an EBITDA of £130 million. An equivalent purpose-driven company might report £100 million. But that’s still £100 million.” In other words, you can embed purpose and still deliver good numbers. “I believe in Stella and my numbers are good,” adds White.
So can the “purpose-driven” concept find a foothold in the insurance industry? Well, as the industry itself evolves – embracing big data and AI to price policies and assess claims – at the very least there are opportunities to think creatively and take a customer-first approach. Big insurers may be set in their ways, but there is scope for entrepreneurs to find ways to better serve their target markets.
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