Discuss vs. Motion: The Restricted State of Range in Insurance coverage
In today’s business world there is a lot of talk about diversity: equal pay, board diversity, diversity recruitment, promotions, etc. Each element of a business is analyzed to determine if and where types of bias might exist. Some prejudices are more visible, while other prejudices require a microscope of corporate culture and the subconscious prejudices of employees.
Insurance is not immune to these trends, although insurance is also an industry that is less well known to the general public. For example, there were no major scandals or customer protests against freight forwarders. Is that because we haven’t made it into the limelight or that things are good enough to keep the current employee and customer base happy?
It is important to analyze how diversity is talked about. Is the discussion about diversity in insurance companies really transparent and meaningful, or is it overly conducive and market-driven? In this series, I’ll focus on data and examples to delve into the diversity of the insurance industry.
The current conversation about insurance diversity
A quick Google search for “Diversity in the Insurance Industry” shows how often the subject is written and discussed. Pages and pages with statistics, opinion pieces and future forecasts analyze the importance of insurance diversity. But what exactly are all of these articles, reports, and surveys really telling us?
In many ways, this level of discussion is extremely positive. Measures are often based on thorough discussion and analysis. When we talk about diversity in the insurance industry, we can also identify gaps in understanding and help keep the conversation mainstream, which can open doors and make employees feel open and honest about diversity.
When “speaking” becomes a problem
The insurance industry is still in the early stages of open discussion of its diversity problem. It was only four years ago that insurance CEOs signed a declaration of commitment at the Leadership Conference of the Business Insurance Diversity & Inclusion Institute to reaffirm their commitment to increasing diversity in their companies.
This is a great feeling, but it’s only as strong as the follow-up to make it a reality. In particular, the commitment does not contain a timeframe for increasing diversity or a basic yardstick, although it does set an annual check-in for progress.
Now, of course, insurance managers will look at diversity from a business perspective. While diversity used to be viewed as a societal good (and it naturally is), more and more data is published highlighting diversity as a path to innovation and revenue. According to the Harvard Business Review, companies with two-dimensional diversity are 45% more likely to report market share growth and 70% more likely to report that the company has entered a new market. In insurance, in particular, top quartile racial and ethnic diversity companies outperform profitability by 32%, while top quartile gender diversity companies are 21% more likely to achieve above average profitability.
The data clearly supports both empathic and financial motivation to advocate for greater diversity in the insurance industry. How is the industry doing so far?
Actions have not surfaced yet
The insurance industry has made some advances in diversity over the years, but it is incoherent.
The following table compares insurance diversity in 2014 versus 2019, compiled using data from the US Bureau of Labor Statistics. Unfortunately, “actuaries” didn’t have a breakdown of diversity so I didn’t include this profession.
Click / tap to view a larger image.
Overall, the gains over the 5-year range are greater than the decreases, which is a good sign. However, it is important that we dig deeper into individual occupations.
- Insurance agent: The distribution of diversity has remained largely the same for this occupation, although women recorded a slight increase of 3.6%.
- Insurance claims and case handlers: Increased diversity for white-collar workers is a double-edged sword. On the one hand, it’s great that insurance companies in general have more diverse settings. However, diversity attitudes in administrative roles cannot have such a large impact on culture or decision-making. The high gains in Black or African American (6.6%) and Hispanic or Latino (5.4%) are due to executives simply trying to increase their diversity numbers for a good PR story without actually affecting change .
- insurer: This is a very disappointing story. Underwriters are major decision makers in the industry, and diversity here has decreased dramatically. Almost 10% fewer women in 2019 than in 2014. Blacks or African Americans saw a similarly appalling drop of 6.4%.
- Claims adjuster, appraiser, auditor and investigator: The star of this cast is a 6.6% increase in Black and African American populations. This is especially important compared to her decline as underwriters, as Adjusters are similarly important decision makers. Outside of this population, however, history is largely flat.
With a few exceptions, the general story this data tells is that administrative positions are where most of the diversity recruitment in the insurance industry is made. As an industry, we have to ask ourselves: Which prejudices lead us to avoid different decision-making positions?
According to the Insurance Journal, while women make up 60% of the insurance workforce, women hold only 19% of the board seats and only 11% of the executive appointed. Only 1% of insurance companies have a female CEO.
Likewise, a Reuters analysis found that only three of 168 executives in the top 10 US insurers are black. Of the 119 board members of the same companies, only 13 are black.
In my next blog post, I’ll highlight good and bad examples of diversity in the industry and discuss the importance of transparency.