To really promote diversity, insurers need to look at recruiting, retention, and promotion.
Pat Renzi, Principal, Life Technology Solutions, Milliman.
The business case for greater diversity and inclusion is abundantly clear. More diverse companies tend to perform better, with 15% of gender-diverse companies and 35% of ethnically diverse companies more likely to financially outperform their less diverse competitors, according to McKinsey.
Recent research by AXA, IFC-World Bank, and Accenture confirmed the stark realities of an industry struggling with diversity. Women in developing economies have growing incomes and consequently increased needs for income protection. Insurance products for women are expected to represent a $1.7 trillion income opportunity to the insurance industry by 2030. But the report also highlights that insurers have largely ignored women as a key customer segment. Core changes are needed to capture this market, and insurers need women in leadership roles to participate in the strategic conversations if they want to win.
More diversity needed when promoting
But the reality for the insurance industry is that achieving the diversity it wants is proving to be hard work. According to PwC, the industry’s “male, pale and stale” image means it is one of the least popular industries for Millennial women to work, making it hard to break the cycle.
But take a closer look at the figures, and you see the insurance industry actually does a pretty good job of employing women and minorities. However, they are not doing as well at promoting them.
While nearly two-thirds of the people who work in insurance in the United States are women (64%), less than one-third of them (32%) occupy executive or senior management positions, according to 2015 statistics compiled by the U.S. Equal Employment Opportunity Commission. And while 30% of insurance workers are minorities (both men and women), only 11% work in executive or senior management positions.
Insurance executives are aware the industry has an image problem and that its lack of diversity, especially among senior ranks, is likely to increasingly affect competitiveness.
The response has been to write diversity policies. But simply writing a policy does not make a diverse culture. Another concern is that employees think their own companies are merely paying lip service to these action plans.
Nearly two-thirds of Millennial women working in insurance don’t think their employers are doing enough to encourage diversity, and 80% believe that insurers aren’t living up to their public slogans on diversity, according to PwC’s survey.
So what more can insurers do to tackle diversity challenges?
Make diversity a core value
A company’s executives and board members need to fully embrace diversity and inclusion by living it every day. The leaders of the organization need to challenge themselves and others to seek input from coworkers with different perspectives and life experiences, creating a culture of inclusiveness and acceptance. They need to be open and honest that this is hard work, but it will be beneficial to the organization and to the individuals.
They can also make bold statements that make it unequivocally clear they are serious. Aviva CEO Mark Wilson was the first FTSE 100 leader to sign up to a commitment to reach a 30% representation of women among the group’s executives by 2020. Additionally, the company has terminated contracts with suppliers that are not promoting enough women.
Appoint a chief of diversity and inclusion
Insurers Aviva and Generali have created new senior roles to drive change in their organizations.
While companies understand the advantages of diversity, they can find it difficult to work out the practical steps to achieve it.
Creating and executing a diversity strategy is a full-time job, so it needs a full-time executive.
Involve everyone when discussing diversity
Ideas for how to create a diverse and inclusive organization shouldn’t just come from the top down.
Milliman created a diversity and inclusion community where people share ideas on how to make the company more inclusive. The conversations are engaging, educational, and prolific. The response showed that lots of people want to be a part of the conversation, and it quickly demonstrated that the topic of diversity is much broader than gender and race.
Work with the grassroots
Insurers’ “C-suites” won’t become more diverse if there aren’t enough young girls and minority children studying the relevant subjects to provide the next generation of professionals, such as actuaries and data analysts.
From 2004 to 2014, among students enrolled in U.S. college computer science, engineering, and physics courses, fewer than one in five were women, according to figures from the National Science Foundation.
The picture was even worse among minorities. Only about 5% of mathematics and computer science college students were minorities.
To really change the system, insurers need to encourage more women and minorities to study these subjects in school and college.
Milliman is actively involved with The Actuarial Foundation to encourage more young girls in the United States to study math. Additionally, Milliman’s CEO, Steve White, is a member of the Corporate Advisory Counsel of the International Association of Black Actuaries, and Milliman recently launched the Milliman Opportunity Scholarship—a program to help defray tuition for its recipients, members of ethnic groups underrepresented in the profession.
Insurers understand and appreciate the value of embracing diversity, but struggle to turn their aspirations into action.
Those who figure it out will be well positioned to capture the opportunities in tomorrow’s global marketplace.