Too much talk: re/insurers and diversity
The re/insurance industry, in common with others, has been vocal about the need for increased diversity in recent years. The Inclusive Behaviours Pledge, launched in 2018 by Lloyd’s alongside Aviva, AXA, Marsh, RSA, Willis Towers Watson, Zurich and the British Insurance Brokers Association and others, led to rapid uptake in the sector.
“We think of ourselves as a data-led industry, yet the data we have on our diversity is appalling.” Ian Simons, Chartered Insurance Institute
The murder of George Floyd in 2020 and subsequent protests worldwide drove further reflection and brought widespread support for the Black Lives Matter movement.
But talk is cheap. According to some in the industry, while there’s been progress, it’s not been nearly enough. The pledge received a lot of publicity, according to Patrick Tannock, chairman of the Association of Bermuda International Companies and chief executive officer of AXA XL’s Bermuda Insurance Operations, but the results are more difficult to discern.
“If you track what’s happened since the diversity pledge, it’s not much,” he said. “There was a lot of ‘noise’ after the murder of Floyd in terms of awareness where the industry was getting ready to do some interesting things, but when you track what’s happened since then, we still have a lot of work to do in terms of walking the walk.
“If we’re honest with ourselves, we have not moved the needle as materially as we should. We have to move from awareness to execution. There has been some progress made but nowhere near as much as could have been made if there was a sustained initiative.
“The industry has talked a lot over the last several years about advancing the needle on diversity, but when we look at the actual results, we have a long way to go,” Tannock added. “So from my perspective we have to do more than just talking and it has to come from the top. I believe that if we don’t take this seriously, we will not get the most the diverse minds to solve some of the challenges that we are facing as an industry.
“I think it is essential. There’s a business rationale. We need to move from just awareness of why diversity matters, to actual execution.”
“White men being of such a high percentage in the insurance industry is the artificial construct.” Audry Torrence, Stephens Rickard
Speaking with Intelligent Insurer for a special session on diversity and inclusion (D&I), Tannock joined a range of other industry experts including Kael Coleman, chief executive officer and founder of US-based tech-enabled re/insurance broker Protecdiv; Maurice Rose, senior manager for the ERM pillar at MS Amlin in London and chair of Link, the cross-insurance industry LGBTQ+ network; Audry Torrence, executive vice president of North America with executive search business Stephens Rickard; and Ian Simons, based in the UK as customer director of the Chartered Insurance Institute.
Caroline Bedford, chief executive officer and founder of innovation and education business EDII, moderated the discussion.
“We need to move from just awareness of why diversity matters, to actual execution.” Patrick Tannock, ABIC & AXA XL
Not enough numbers
The panel agreed that the industry has much further to go. As Coleman said, few firms reflect the population—51 percent women and 38 percent minorities in the US, for example. But it is not simply that the industry doesn’t reflect society; it doesn’t even represent the student bodies from which the top companies recruit. The Ivy League universities reflect the national population in terms of gender and have 35 percent from minorities and a little over 7 percent who are black.
If a firm’s make-up isn’t similar, he said, “you’re not really trying”. Various factors explain the continuing lack of diversity, but Coleman is uncompromising about the primary cause.
“The biggest challenge from my experience is the effort on the part of hiring companies,” he said.
That has to be led from the top, said Rose, with leaders “walking the walk”.
“It’s around individuals at senior levels showing their support and being proactive around it,” he said. “It’s not enough during Pride month in June in the UK to change your logo to have a rainbow flag.”
If demographic data point to the work that remains to be done in the sector, they also point to one of the significant difficulties the industry faces: the quality of data available.
“One the biggest challenges we have is that we think of ourselves as a data-led industry, yet the data we have on our diversity is appalling,” said Simons.
“Very few companies have a rich intersectional view of their own people, and if we’re looking at the sector as a whole, the ability to compare that across different sub-sectors and employers to figure out where the gaps and opportunities are is lacking.”
He added: “It’s a big need so we can put some proper targets in place.”
As Bedford observed: “We wouldn’t write business on the basis of the evidence we have in the D&I sector.”
And, as with uninformed underwriting, the worry for the sector is that it could be exposing itself to significant risks.
“It’s not enough during Pride month in June in the UK to change your logo to have a rainbow flag.” Maurice Rose, MS Amlin
Pressure to change: regulation and ratings
If the sector doesn’t change, it is likely to find change forced upon it. In April in the UK, for instance, the Financial Conduct Authority finalised its rules on requiring listed companies to disclose against targets on the representation of women and ethnic minorities on their boards and executive management.
Rating agencies are likely to bring pressure, too, according to Coleman. “You are already seeing rating agencies starting to ask questions about diversity and trying to understand it. I think we’re going to see that understanding move into a rating component,” he said.
“That’s going to force people who been talking about it to walk the walk because it’s going to dramatically and in the very near term affect our bottom line.”
More broadly, the failure to boost D&I means re/insurance businesses miss out on a diversity of thought from a wide talent pool. That risks leaving them “increasingly irrelevant”, said Simons.
“We have to understand, represent and solve the problems our customers face and live, not just start with products and then push them out to people,” he said. Understanding those customers is likely to prove challenging if the industry doesn’t include them.
“The industry must move from looking at diversity as ‘different’ to look at it as ‘difference’,” said Torrence. It’s a subtle difference, she acknowledges, but one that looks at the benefits of various viewpoints, backgrounds and cultures.
“The insurance industry needs to embrace variety simply because a variety of people is what comprises the world,” she said. D&I initiatives are often looked at as almost artificial add-ons to businesses. Instead, the commitment to D&I should be embedded in it.
“White men being of such a high percentage in the insurance industry is the artificial construct,” she said. “It does not reflect the world, and that’s why we need to embrace diversity.”
