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Speaking against action: the limited state of diversity in insurance

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There is a lot of talk about diversity in today’s business world: equal pay, board diversity, hiring diversity, promotions, etc. Each element of a business is analyzed to determine if and where types of bias can occur. Some prejudice is more visible, while others prejudice must place a microscope on the culture of the company and the unconscious prejudice of employees.

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Insurance is not immune to these trends, but insurance is also an industry that is less in the public eye. For example, there were no major scandals or protests against customers against transport companies. Is it because we just have not made it into the spotlight yet, or that things are good enough to satisfy the current employee and customer base?

It is important to analyze how there is talk of diversity. More specifically, is the discussion of diversity in insurance companies really transparent and meaningful, or is it too proactive and market-oriented? During this series, I will focus on data and examples to dive into diversity in the insurance industry.

The current conversation about diversity in insurance

A fast Google searches for ‘insurance industry diversity’ will show how often the topic is written and discussed. Pages and pages with statistics, opinion pieces and future predictions analyze the importance of diversity in insurance. But what exactly do all these articles, reports and surveys tell us?

In many ways, this level of discussion is tremendously positive. Action is often based on thorough discussion and analysis. By talking about diversity in insurance, we can also see gaps in understanding and help make the conversation mainstream, which can open doors and make employees feel more comfortable being upfront and honest about diversity.

When ‘talking’ becomes a problem

The insurance industry is still openly discussing the diversity issue. Only four years ago, insurance heads had a commitment by the Business insurance Leadership Conference for Institute for Diversity and Inclusion to reaffirm their commitment to the growing diversity of their businesses.

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It’s a great sentiment, but it’s just as powerful as the follow-up actions it realizes. In particular, the Memorandum of Association does not provide a timetable for increasing diversity, nor does it provide a fundamental measure, although it does provide an annual link on progress.

Now, of course, insurance managers are going to look at diversity from a business perspective. While diversity used to be considered a societal asset (and it is, of course), more data is emerging highlighting diversity as a path to innovation and revenue. According to the Harvard Business Review, it is likely that 45% more market enterprises will report with companies with two-dimensional diversity and that 70% are more likely to report that the company has conquered a new market. In insurance specifically, companies are in the top quartile for racial and ethnic diversity in leadership 32% more likely to outperform their peers in profitability, while companies in the top quartile for gender diversity do 21% more likely to see above-average profitability.

It is clear that the data support an empathic as well as financial motivation to stimulate greater diversity in insurance. So how is the industry doing so far?

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The insurance industry has seen some progress in diversity over the years, but it has not been merged.

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The table below compares diversity in insurance in 2014 versus 2019, compiled using data from the U.S. Bureau of Labor Statistics. Unfortunately, ‘actuaries’ did not have an outline of diversity, so I did not include the profession.

Click / tap to see larger image.

Source: https://www.bls.gov/cps/cpsaat11.htm

Overall, increases have decreased over the five-year decline, which is a good sign. But it is important that we go deeper into individual professions.

  • Insurance agents: The breakdown of diversity in this occupation remained largely the same, although women had a slight increase of 3.6%.
  • Insurance claims and policy processing clerks: Increased diversity for clerks is a double-edged sword. On the one hand, it is great that insurance companies are generally bringing in more diverse rents. But diversity appointments in administrative roles cannot have such a big impact on culture or decision making. The high increases for Black or African Americans (6.6%) and Hispanic or Latino (5.4%) are important that executives may just be trying to increase their diversity numbers for a good PR story and not actually change does not affect.
  • Insurance underwriters: This is a very disappointing story. Underwriters are key decision makers in the industry, and here is drastic decline in diversity. Nearly 10% fewer women in 2019 than in 2014. Black or African Americans had a similar horrific decline of 6.4%.
  • Claims adjusters, selectors, examiners and investigators: The star of this profession is the 6.6% increase in Black and African Americans. This is especially important compared to its decline as underwriters, because adapters are equally important decision makers. Beyond this demographic, however, the story is largely flat.

With a few exceptions, the general story that tells this data is that administrative positions are the place where most diversity rentals take place in insurance. As an industry, we need to ask ourselves: What prejudices cause us to avoid diversity in decision-making positions?

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According to Insurance Journal, although women make up 60% of the insurance staff, they occupy only 19% of the board seats and only 11% of the nominated executives. Only 1% of insurance organizations have a female CEO.

Not so, a Reuters analysis showed that only three of the 168 senior executives of the top ten U.S. insurers are Black. Among the 119 board members of the same companies, only 13 are blacks.

In my next blog post, I will highlight good and bad examples of diversity in the industry and discuss the importance of transparency.

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