Congress examines diversity of insurers; Results ‘disappointing’, lawmakers say

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Women and people of color still face a glass ceiling at the executive level, and people with disabilities are severely underrepresented in the industry, the report found.

The report was released by Congresswoman Maxine Waters, D-Calif., chair of the Financial Services Committee, and Congresswoman Joyce Beatty, D-Ohio, chair of the Subcommittee on Diversity and Inclusion. The aim of the report is to “explore and resolve the systemic and economic exclusion of women, people of color, persons with disabilities, LGBTQ+ individuals, veterans and other members of our society who must fight for a seat at the table.” .”

The committee requested data from insurance companies receiving direct premiums of $7 billion or more (a total of 27 insurance companies) to report and comment on their 2017-2021 diversity and inclusion data and practices. The request included six categories of quantitative data: workforce diversity, executive leadership diversity, CEO diversity, board diversity, supplier diversity, and asset investment. In addition, companies were asked qualitative questions related to internal policies and practices in the field of diversity and inclusion.

Rep. Beatty called the research results disappointing during her opening speech at a hearing on Tuesday. She also noted in her opening statement that none of the insurance company CEOs invited to speak at the hearing agreed.

“Let the record show that I am going to invite all 27 CEOs to meet with me on Zoom,” said Beatty.

By the numbers

Women made up 54.6% of the total workforce at the largest U.S. insurers in 2021. Only two companies surveyed had less than 50% of their total workforce female in 2021: Northwestern Mutual (47.9%) and AXA XL (46.9%).

Women’s representation is concentrated at the lower level and decreases significantly as you move up the corporate ladder – 77.2% of administrative support workers were identified as female, compared to 33.5% at the executive level and 28.5% at board level.

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While no company achieved gender equality at the executive level, Nationwide Insurance and American Family Insurance came closest, each with 41.5% of executives identifying as women. Chubb was furthest from parity with 23.4% of executives identifying as female.

The report found that workers of color had a similar problem.

By 2021, 30.5% of all employees at participating insurers were people of color — this compared to 42% at major banks, 40.6% at large investment firms and 42% at the general population, the report said. However, only 16.2% of executive-level employees were people of color; about 7% were Asian, 4.6% were Black and 3.1% were Hispanic or Latino. At the board level, only 22.3% identified themselves as people of color.

The percentage of people of color in the total workforce varied significantly by company, ranging from a low of 10% at Erie Insurance and Auto-Owners Insurance Company to a high of 54.6% at Assurant. GEICO had the highest percentage of executives of color (31.3%), while Erie Insurance had the lowest percentage (0.0%).

In 2021, the CEOs of the companies surveyed were predominantly white males (88.9%). Two companies had white female CEOs (Progressive Insurance and Tokyo Marine HHC), and one had an Asian man as CEO (Fairfax Financial). No CEOs identified as LGBTQ+ or living with disabilities.

Only 4% of employees at these insurance companies had disabilities in 2021, compared to nearly 25% of U.S. adults with disabilities, the report said.

The average amount of money spent with different suppliers at the insurance companies surveyed was 2.7% for minority-owned suppliers, 2.4% for women-owned suppliers, and 1.2% for suppliers owned by minorities and women as a percentage of total purchasing expenditure. GEICO reported the lowest numbers, with 0.0% spending at minority suppliers in 2021, while The Hartford reported spending 6.3%. Meanwhile, when it comes to female-owned suppliers, The Hartford and GEICO reported 0.2% spending, while Liberty Mutual Insurance reported 7.3% spending.

The diversity and inclusion budget for insurance companies averaged $5.3 million in 2021 (0.24% of the average total budget of the companies surveyed), an increase from an average of $3.2 million (0.13 %) in 2017.

Beyond the numbers

It’s not just about demographics, though.

“I think insurers understand that it’s not about the number of different faces at the table, it’s about the experience of those individuals once they’re brought on board,” said Leroy Nunery, president of Evolution Advisors LLC and founder and director of PlūsUltré LLC who was a witness at the hearing.

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“The industry appears to be shifting from an isolated focus – on hiring data alone – to a more inclusive view of employee experience and retention programs. But there is also evidence of growing focus on leadership development, mentorship and retention programs, and an increased interest in HBCU recruitment.”

Eloiza Domingo, Chief Diversity Officer and VP Human Resources at The Allstate Corporation, agreed.

“At Allstate, we purposely use the term inclusive diversity and equality, or IDE,” Domingo said. “More than 20 years ago, we made inclusion an adjective, because diversity really is nothing without an inclusive environment to thrive in… culture and community.”

Nunery said lack of diversity at the C-Suite level is a big part of the problem. “If you don’t have leadership that represents or can talk to the concerns and issues of different communities, it’s likely that management within those companies will not be held accountable,” he said.

Nunery also said the industry needs to think outside the box to address the lack of diversity and the talent shortage in general. “The way people are ultimately hired in the insurance industry is not from school. It’s not from an ad. It’s not from a recruiter. It’s because of a personal connection or a friend. And that goes for white, black or whoever. The industry itself has a problem with brand awareness. So if you want to increase not only the amount of talent, but also… the amount of ownership, you have to have sponsorship. You have to have someone on the inside, but also on the outside who advocates for that cause.”

He noted that companies need to build awareness about the industry, direct individuals to promote opportunities, and even help the community understand insurance as a product. “Frankly, you don’t need to have an insurance background or any sort of designation to pass,” he said.

Next steps

Ann Wagner, R-Mo., cautioned that while she supports voluntary disclosure of DEI data, she “has long opposed mandatory disclosure that creates an apples-to-oranges comparison between companies with different missions, goals, locations and resources.”

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She also noted that “since each company has their own metrics, I don’t think we can really use this data for a direct comparison. But it is a starting point to look at which practices work to promote diversity and which obstacles companies still face.”

The National Association of Mutual Insurance Companies commented on the hearing and noted the progress of the P/C industry on DEI.

“Today’s hearing showed that property/accident insurers are committed to diversity and inclusion and to building a workforce that directly reflects their policyholders and the people of our great nation,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC, in a ruling.

“As Congressional Research Service data showed at the hearing, insurers pay higher wages than the general economic average and employ a higher percentage of women and African Americans than the general workforce. Insurers are also looking ahead, partnering with historically black colleges and universities and Latin American service providers to recruit the next generation of industry leaders.”

Recommendations of the subcommittee:

  • Insurance companies must regularly collect disaggregated data on their workforce, diversity of executives and board members, as well as conduct regular audits of pay and racial equality to better understand their current workforce and why employees of color and women are not rising in the pipeline. This information must be made public.
  • Insurance companies must partner with traditionally black colleges and universities (HBCUs), minority services (MSIs), and community colleges to build talent pipelines in these organizations.
  • Insurance companies should establish training academies that educate less senior employees about job opportunities and match graduates with mentors and sponsors to support their career growth.
  • Insurance companies should consider at least one diverse candidate for all leadership and board positions when vacancies arise. Various candidates can be persons with disabilities, LGBTQ+ persons, women and people of color.
  • Insurance companies must consider board membership criteria and selection committee composition to reduce bias in the application, selection and nomination processes.

See the full report: “Diversity and Inclusion: Holding America’s Largest Insurance Companies Responsible.” On September 20, the Subcommittee on Diversity and Inclusion also held a hearing to discuss the findings.

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