News

August 24, 2010

Reduce insurance costs for female entrepreneurs, says broker

Research revealing that female entrepreneurs make far fewer insurance claims than men should lead to lower insurance premiums for women, a leading insurance broker has claimed.

SimplyBusiness.co.uk’s survey of 150,000 small-business customers showed that businesses owned by men cost insurance companies 60 per cent more in claims than businesses owned by women. Female business owners make fewer claims and claim for less when they do, the research revealed.

Further research based on interviews with 200 male and 200 female small-business owners suggested that 50 per cent of men have a “risk-confident” attitude to business, compared to just 30 per cent of women.

“It’s well known that women borrow less money than men and are more likely to go to friends and family,” said SimplyBusiness.co.uk’s head of marketing and analysis, Alastair Douglas. “Female-run businesses are less likely to go bust, but they are also less likely to be very successful.”

“When we took a look at our customers – 20 per cent of whom are women – we discovered that female-run businesses are significantly more profitable for the insurance industry as a whole,” Douglas added. “This means their premiums must be too high and should come down.”

Douglas stressed that more research was required to confirm the findings across the industry, including looking at size and type of business. But he cited the car insurance industry as an example of how premiums could be structured differently for men and women according to the risk profile presented by each group.

Emma Jones, founder of home business community Enterprise Nation, said: “This research doesn’t come as a surprise. Women take an approach to finance that I think is ultimately sensible – it’s about not wanting to get into debt and not spending money you don’t have. This is reflected in claims from insurance companies, so it’s right to suggest premiums should be lower as the evidence shows women are a lower-cost customer group for the insurance provider.

“With the global risks we’ve seen taken across the financial sector of late, I say now is an opportune time to reward good financial housekeeping and cautious spending,” she added.

In 2005, insurance companies secured an opt-out from a European equality directive which would have meant bringing men’s and women’s premiums into line. Insurers argued that they should be entitled to base premiums on the risks posed by specific groups in society.