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Marketing Insurance Products to Female Business Owners

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Against the tide of layoffs and downsizing, women-owned businesses are growing at nearly twice the rate of all U.S. privately held firms. In fact, according to the Center for Women’s Business Research (CWBR), 10.1 million firms are owned by women, employing more than 13 million people and generating $1.9 trillion in sales as of 2008.

The CWBR also reports that these female-owned businesses invest approximately $54 billion per year in employee benefits.

Despite the continued success and sustained growth of these businesses, however, female business owners are less likely than their male counterparts to offer their employees group life and health benefits, according to LIMRA International. The reason? LIMRA cites that female-owned firms tend to be smaller than male-owned companies, making it difficult for them to offer comparable benefits.

Even more telling are beliefs and attitudes of these business owners when it comes to their ability to offer meaningful benefits to their employees. For example, when asked by LIMRA if they wanted to offer benefits to their employees, the majority said they did, but that they believe the cost would be prohibitive. And more importantly, many female business owners believe they do not have enough employees to qualify for group benefits. A simple fix to overcoming this hurdle is to offer smaller companies the solution of voluntary, employee paid benefits.

According to LIMRA, “Voluntary employee-pays-all benefits have often been suggested as a way to provide some benefits to employees at a reduced cost to the employer. Businesses basically pay only for the administrative costs/fees of the voluntary product, resulting in much lower costs to the businesses than the typical employer-paid benefit.”

More marketing and relationship building necessary
Simple fixes aren’t always possible, though, and a greater investment in marketing and one-on-one communication can be important for producers looking to expand their client base in this market. The innovations that have been driving the employee benefits marketplace over the last few years (e.g., employee-pays-all benefit plans with minimal participation requirements) have simply not reached the majority of female business owners.

Some point to a lack of communication with this sector, while others attribute it to a belief that smaller firms may be unable to purchase any additional benefits, leading producers to avoid approaching these business owners with ancillary benefits.

Conversely, many female business owners may not seek the assistance of a broker or agent because of what some in the industry call a “trust divide.” Once a producer effectively prospects and targets a potential client, the challenge then becomes how to communicate with them. Overcoming the so-called trust divide can be done by providing superior follow-up after the sale:

“Providing superior service after the sale is one way of continuing a relationship and building trust. It also goes a long way in obtaining referrals,” according to the CWBR. “This, in turn, has the potential of increasing the producer’s business.”

Wide-open marketplace
Regardless of the reasons why female business owners are underrepresented as employee benefit clients, producers are in a unique position to actively prospect and offer these women the benefits solutions that drive the rest of the marketplace. It is encouraging to note that female business owners represent a range of industries that are attractive to producers and carriers alike. In 2006, more than two-thirds of female-owned businesses were in the services industry; 14.4 percent were in retail trades; and 7.7 percent were in real estate, rental, and leasing. What’s more, they are easy to identify – the CWBR reports that female owners of firms with $1 million or more in revenue are more likely to belong to formal business organizations, associations, and other networks.

As mentioned, voluntary benefits may be particularly relevant to female business owners. Anecdotal evidence also suggests that these prospects are receptive to value-added products such as disability insurance with embedded employee assistance programs or absence-management capabilities, which can help business owners manage absences associated with short-term or long-term disability, as well as the constantly evolving policies that are covered by the federal Family Medical Leave Act of 1993.

Make it easy
Experts in this market also emphasize the need to complement quality products with technology that makes business easier. According to the CWBR, female business owners value technology as a means to create workplace flexibility. Their statistics show that 61 percent use technology to integrate the responsibilities of work and home, and 44 percent use technology to allow employees to work offsite or create flexible work schedules. Online enrollment systems that provide a single point of contact, self-service Web sites with sophisticated reporting capabilities, and customized marketing materials to build awareness can all promote participation and educate employees throughout the enrollment process. Convenience, flexibility, and personalized approaches are all cited by industry experts as the qualities female business-owners value most.

In the end, however, it all boils down to relationships. CWBR research finds that “more than two-thirds (67 percent) of women business owners choose financial products based on their relationship and experience with a lender.” If you take the time to understand female business owners’ unique needs and establish a relationship with them based on mutual trust and shared goals, studies show that these prospects will be more likely to choose your product or service over your competitors’.

Donna Fahey is senior vice president of business/product development and marketing of American General Employee Benefits Solutions. She can be reached at 732-922-7510 or [email protected].


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