Why diversity matters for insurance

Why diversity matters for the future of insurance

Diversity remains a fundamental challenge for tech startup ecosystems, with only 14% of founders globally being females (19% locally) and <25% considered ethnically diverse. Females make up 5% of ASX200 CEOs and only 15% of venture capital is allocated to female founders. Yet in the workforce, females make up 50% of all support staff globally and 25% of all senior managers.

Contemplating diversity for Insurtech Gateway Australia, I recall an experience at university.

One of the core classes in my MBA was a module on ‘Sustainability’. I barely lasted 60 seconds in the first class before I interrupted with questions like, why is there a module dedicated to sustainability? Is it not a well understood principle?  (i.e. take, without leaving the source from which you’ve taken in the red).

I got some empathic snickers from my peers, but it soon became clear that there had been decades of poor industry behaviour at odds with the principle of sustainability and this was why a remedy (and study) was required.

So the fact that this subject existed, became an area of interest. I learnt about ASX corporate governance frameworks, ESG – Environmental, Sustainability, Governance Policy, the ‘sustainability imperative’, resource constraints and public trust. And the policies, frameworks, relationship and trust-building initiatives touted as remedies.

Key lessons upon reflection:

  1. If you value sustainability in your organisation from day 1, you won’t need a remedy.
  2. If you value other important principles that influence the achievement of your objectives, you won’t need to remedy for them either.
  3. Diversity is parallel to sustainability. We’re further along in the sustainability journey and we can see the negative impacts on performance; it’s only a matter of time before we see the same for diversity.
  4. To alter course, we need to proactively put a shoulder to the immense inertia of eons of human culture and tradition.

These insights are one of the reasons why Gateway is big on values. Here is a snippet of our founding values.

We value principles for various reasons including individual effectiveness and effectiveness in groups. We also value principles that ensure we are ‘effective’ and ‘good’ at the same time e.g. win-win, sustainability and empathy.

Until recently, I have not been proactive about addressing my conscious and unconscious biases on diversity but we recently developed a thesis to frame our commitment to this issue.

Diversity in thinking equates to greater levels of creativity, innovation and productivity.

The diversity profile of; decision-makers within a startup, and product feedback loop contributors, should be aligned with the diversity profile of the consumer market in which they seek success.

‘Equal opportunity is about being effective and socially ‘good’.

According to our industry bible, The Lean Startup, the success of tech startups can be attributed to the revolutionary methods deployed for creating and delivering new products and services; underpinned by customer centricity which is achieved through effective product feedback loops. The feedback loops create a virtuous cycle whereby product and service iterations are tested with consumers and new releases shaped by the feedback. It stands to reason that the diverse make-up of the feedback loop contributors should be a reflective sample of the diverse make-up of the consumer population.

Further, research shows a statistically significant relationship between the high performance of companies across key metrics and companies that are led by females. Females also achieve a greater return of capital employed in startups, 78 cents in the dollar, compared to 31 cents from their male counterparts.

Therefore, we believe a startup will improve their levels of certainty in achieving product-market fit and sustained growth when their team and the feedback loop contributors are diverse.

Insurtech Gateway Australia is pledged to diversity across gender and ethnicity for the purpose of promoting optimal performance and equality.

And there is ample data to show the degree to which diversity is needed.

  • Australia has become the most diverse nation in the world
  • 30% of Australians were born overseas
  • Net overseas migration accounts for over half of Australia’s ANZ’s population growth
  • Asian born Australians now represent more than 10% of the Australian population
  • From 2015, Asia overtook Europe as the leading overseas contributor to ANZ population growth
  • The number of ethnic groups represented in senior management: 1.4
  • Hinduism is the fastest-growing religion in Australia
  • Females make 85% of consumer purchase decisions and drive 70-80% of consumer spending.

If we get diversity right, there will be no need to subject our children’s generation to university modules teaching the remedy. Not to mention optimising performance outcomes and equality.

Earlier in the year, we started to track the gender and ethnic profile of founders who enter our deal flow funnel in an effort to service our thesis.

We currently have 33% female founders in our portfolio. 0% 1st generation Australians. 50% 2nd generation. We look forward to welcoming more diversity to our ranks.

If you’ve got a bonkers or brilliant idea, give us a call today.

 

Simon O’Dell

+61 401 100 606

simon@insurtechgateway.com.au

 

References: HBR, Startup Genome, TechCrunch, Nielsen Company, Centre for Business Growth, Grant Thornton, McKinsey