“Insurance is made by financially stable people for financially stable people”
Insurance often talks about innovation in terms of technology, data and distribution. But for Chris Lee, Head of Strategy and Innovation at SaaS platform Blink Parametric, there is a more basic question: who is doing the innovating, and how well do they understand the people they are trying to serve?
“Insurance is made by people who are financially stable for people who are financially stable,” Chris says.
Speaking as part of Link’s wider series of articles exploring the relationship between diversity and innovation, Chris argues that the insurance industry’s diversity challenge runs deeper than representation alone. It’s also about mindset, assumptions, risk appetite and the ability to see customers clearly.
Insurance’s selection bias
Even if you ignore sexuality, gender, race and other protected categories, “the insurance industry has a selection bias towards quite a specific type of person,” Chris says.
He contrasts insurance with other career paths open to numerate, capable people. The adventurous might go into investment banking. The intellectually motivated might choose academia. The safer road is insurance.
Why does this matter? Because insurance is already an industry with strong incentives to move slowly. Highly regulated, capital-intensive, relationship-driven and difficult for outsiders to challenge. On top of this, he sees a profession full of rational but risk-averse people who tend to reproduce their existing habits and assumptions. Is it any wonder the industry “traditionally doesn’t challenge itself”?
The consequence, Chris argues, is that products can be designed around assumptions that feel rational inside the industry but fail to reflect the reality of many customers’ lives.
“A complete lack of awareness…”
Rational and innovative don’t naturally go together. At his previous Insurtech startup Chris worked on a parametric product designed to pay people ahead of a hurricane so they could cover evacuation expenses.
The idea was simple: if a hurricane was forecast to hit, the product would pay out early so people had cash to leave.
“The kind of response we always got from carriers was, yeah, why wouldn’t they just put it on a credit card?” Chris says with a wry smile. “There was just this complete lack of awareness that not everyone can get access to consumer credit, or that many people would already be in debt, or that lots of people on lower incomes are reluctant to use debt at all – even in a crisis.”
If the industry can’t understand how people make financial decisions under pressure, it will continue to design products that fail: “The lack of diversity in insurance means that any sort of misaligned perspective like that ends up losing that customer empathy.”
Fairness, equity and the difficulty of designing for different needs
Chris is keen to stress that insurance does genuinely try to treat customers fairly, mostly by treating people the same (partly at the insistence of regulators such as the FCA, PRA and EIOPA). But genuine equity may require treating different needs differently, he says – and here the rules around fairness may pose a barrier.
“Your intention is to get fairness into your financial products by offering the same financial products to everybody.” But then, “when you try to introduce equity, you need to kind of customise your financial products for certain people. And that’s very difficult for a whole host of reasons.”
Take the example of trans-specific health insurance products, which could be ruled “unfair” under current regulatory assumptions as they would naturally exclude most consumers. There are also ethical tensions around other kinds of products, for example life insurance for people with HIV – to what extent is it ethical to profit off a vulnerable group?
Therefore, while more diverse senior executives could help to develop niche products, that wouldn’t resolve the inherent technical and ethical complexities of those products. Rather than use this as an excuse for maintaining the status quo, Chris insists that this complexity “is exactly why a wider variety of perspectives is needed.”
Innovation depends on trust – and trust itself is biased
In mature insurance businesses, decisions are supposed to be evidence-based. But early-stage innovation often begins before the evidence exists. At that point, decisions depend heavily on whether someone is willing to believe the person making the case.
“In innovation, entrepreneurship, startup world… in a world where there’s no proof… a lot of what you’re doing essentially comes down to ‘trust me, bro’,” Chris says.
If innovation depends on trust, and trust is shaped by familiarity, then founders who look, speak or present like existing decision-makers may have an advantage.
As Chris puts it: “There’s obviously a whole bunch of unconscious biases people have that are going to help them trust you if you look and act like me, which can work against people who don’t fit.”
As is clear from our conversation, in insurance, objections can be legitimate and still function as barriers: regulation, data protection, reserving, accumulation risk. A decisionmaker does not have to say, “I don’t trust this founder.” They can simply find a technical reason not to proceed.
“Insurance companies have just a million reasons to say no,” Chris says.
In this environment, lack of diversity can affect not only who gets hired, but whose ideas are believed, funded, piloted and scaled.
Should we rethink the founder archetype in insurance?
Chris argues that insurance may have borrowed the wrong founder model from tech and fintech. The charismatic, reckless, hyper-optimistic founder may work in some sectors, but maybe that’s wrong for insurance.
“Some of the things that get rewarded in traditional founders – recklessness… exaggeration or boisterousness around numbers – some of the things that will do you well if you’re starting an AI startup will not do you well if you’re starting an insurance startup.”
As a result, Chris suggests there are good commercial reasons to back people from underrepresented backgrounds: they may be undervalued by competitors, bring new market insight, or have had to overcome more to reach the same room.
“This person had to break through so many more glass ceilings to get here than I did,” he says, adding that more diverse founders and talent may be a better match for what insurance innovation actually requires: resilience, caution, collaboration and insight.
What LGBTQ+ inclusion adds to the innovation conversation
Chris is at pains to stress his point of view is that of one who doesn’t identify as LGBTQ+ – he doesn’t want to claim specific insights or that his lived experience is anything other than that of a straight, white, cis-gendered man.
That said, he is clear that “the financial case for products that serve LGBTQ+ customers is pretty good,” even where needs, behaviours or brand affinity differ.
But the answer is certainly not for insurers to slap Pride branding onto existing products. It’s that markets are better understood when the people designing for them include, or at the very least seriously listen to, those communities.
Practical inclusion: who speaks, who fits, who feels welcome
So how can organisations be more inclusive? Chris talks about reviewing Microsoft Teams transcriptions to see who speaks in meetings, who needs more encouragement and who may be dominating the room and need a little reining in?
And then there’s the traditional dress codes of insurance companies, conferences, and networks, which he thinks is probably off-putting to more diverse talent. “If we’re ever gonna feel comfortable for outsiders, like, we gotta get rid of the uniform!” he says.
“I don’t want to see an industry filled with hoodies, but I do want an industry where someone who has tattoos, or a piercing, or a pixie cut feels completely comfortable, because only if they’re comfortable will they be able to challenge and innovate.”
Final thoughts
For Chris, the link between diversity and innovation is reflected in the products insurers design, the customers they misunderstand, the founders they believe, and the ideas that survive internal scrutiny.
Insurance may pride itself on being rational, but real innovation often begins before proof is available. At that point, the industry has to decide who it trusts. A more diverse industry may not remove that uncertainty, but it may become better at recognising which risks are worth taking – and which customers it fails to see.
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