DEI (diversity, equity, and inclusion) is one of those catchy terms you hear tossed around the office, but unlike “lean in” or “circle back”, an intentional effort around DEI actually does change everything – especially in the insurance industry. Historically, the insurance industry has been plagued by the Jim-Crow-era tactics that were leveraged against minorities for decades; policies like redlining and race-based rates and premiums.
Insurance leaders are recognizing DEI not only as a moral imperative but as a sound business strategy that drives real ROI. “Diverse and inclusive teams have been proven to be more effective, and able to create better economic and social outcomes,” the Insurance Information Institute reports.
The insurance industry suffers from common shortcomings in terms of leadership, equity, sponsorship, and growth. This applies in all areas of diversity, gender and race in particular.
There are measured steps insurance leaders can take to transform their companies into truly modern, successful 21st-century organizations. In this article, we’ll identify DEI shortcomings and improvement areas that are common to insurance companies today. We’ll make recommendations as to how insurance leaders can take proactive steps to improve company culture, diversify their talent, and create more equity among company leadership — driving business value and longevity in the process.
The True Measure of Diversity in Insurance
DEI is a priority among most companies today, but leaders at even the most devoted companies often misunderstand what makes a modern workplace truly diverse and inclusive. Certainly, diversity in terms of gender, age, ethnicity, and race is a factor, but too often, business leaders seek only to “check a box” by hiring for diversity alone, and only at the entry level. What’s often overlooked is whether or not diverse team members have equitable growth opportunities and representation in management roles.
In terms of employee diversity alone, McKinsey reports that the insurance industry is more diverse in comparison to any other industry by 7 to 14 percentage points, where “the entry level is two-thirds women,” but this belies a diversity gap in insurance that persists at the senior levels of insurance companies.
For example, 78.2% of insurance claims and processing clerks are women, and 25.3% of those employees are Black or African American, the Bureau of Labor Statistics (BLS) reports. Those are strong figures at the entry level compared to other industries. However, only 45.3% of business and financial operations employees are women, and only 9.2% of these professionals are Black. Read it again, only 9.2% of business and financial operations team members are Black.
Insurance companies “lack the breadth of perspective and experience that women bring — especially in senior positions like these,” McKinsey observes. “Women of color are deeply underrepresented.”
Taking a Top Down Approach
There are systemic measures insurance leaders can take to address these issues, making a top down approach important to the success of a DEI strategy. But efforts to improve company culture and practices must also focus on the conscious and unconscious biases that rest within individuals. These include societal perspectives, which even well-meaning employees responsible for DEI may struggle to shake. Such individual shortcomings can more broadly hurt DEI initiatives.
Unfortunately, it’s true that women with qualifications identical to men are 30% less likely to be called in for a job interview, according to a recent study involving 1,372 real job offers. One factor may be unconscious biases about women. “We have societally ingrained notions that [a woman] is going to prioritize her family instead of her job and, therefore, will be a less valuable employee,” McKinsey describes, even though men are frequently guardians or parents.
Meanwhile, experiments, where indicators about ethnicity, gender, age, and race have been removed from resumes or applications, have resulted in greater equity during recruitment. These efforts effectively remove unconscious and conscious biases from the equation in a targeted way. SHRM reports on one such experiment conducted by the American Alliance of Museums (AAM), where their director of HR states that results have “changed our mindset as an organization.”
Insurance companies may wish to consider applying this strategy by adapting incoming resumes while recruiting new employees. This may not be practical when combing through large volumes of applicants for multiple open positions. This approach may also be a challenge at executive levels since boards and other executives need a 360-view of all applying candidates.
How DEI Drives ROI
Needless to say, insurance leaders willing to take diversity, equity, and inclusion seriously have their work cut out for them. But those who don’t commit to meaningful changes — like those who claim to be committed to DEI but treat these initiatives like “checking a box” for the sole purpose of reporting or public perception — are ultimately shortchanging their own companies in the long term.
That’s because DEI at the leadership level drives business results. A 2021 study of 600 insurance industry professionals, DEI leaders, and executives attending the Inclusion in Insurance Forum showed that “companies with greater diversity are 70% more likely to capture new markets,” Insurance Thought Leadership reports. Similarly, “companies with diverse management teams experience a 19% increase in revenue compared with less diverse companies.”
Five Ways Insurance Leaders Can Drive Meaningful Diversity, Equity, and Inclusion
So, where exactly should insurance leaders start with their DEI initiatives? With the right strategic approach, insurance-company leaders can create a framework for diversity and inclusion that drives greater equity, business value, and a healthier company culture. Here are five techniques executives and other senior team members can adopt for a more diverse, equitable, and inclusive environment.
1. Commit to DEI as a Business Strategy
DEI is not a PR initiative or a nice to have. Those who treat DEI superficially in these ways neglect to consider what’s possible in terms of business results. “DEI initiatives must be run as a business strategy just like every other strategy an association undertakes,” as Harriet Dominique, chief diversity officer at USAA explains to Insurance Thought Leadership.
This means insurance leaders are most successful when they commit to DEI early on and integrate it into team initiatives in a meaningful way. For instance, insurance executives may wish to create a DEI committee within the company, provide resources for employees to engage in diversity and inclusion education opportunities, or partner with third-party DEI consultants to drive impactful change and open doors for new talent.
2. Address Biases Directly
Insurance leaders can work to become more aware of their own and their senior leaders’ biases and unconscious attitudes, then encourage self-reflection and improvement among individual employees. For example, well-meaning individuals may not be aware they’re biased against candidates with foreign accents, even when those applicants and others are equally qualified. Engaging employees in workshops and training can help them increase their understanding of how these beliefs manifest themselves in hiring decisions, company culture, team dynamics, and other business processes, challenging individuals through exercises and scenarios without singling out anyone in a confrontational way.
3. Prioritize Sponsorship of Diverse Individuals
“Women and people of color are often over-mentored but under-sponsored,” McKinsey describes. Sponsorship involves vocally supporting candidates and proactively creating opportunities as opposed to simply training individuals for existing job or business requirements. Insurance executives should drive these initiatives themselves by using their influence to create new career paths for diverse team members within their companies. Critically, each business leader must be willing to vocalize their support of individual employees if they want to drive meaningful changes and results. It’s this willingness among leaders to take personal risks that achieve actual changes at management levels.
4. Invest in DEI as a Business Strategy
Insurance leaders must align these efforts with business goals in the same way they align traditional business initiatives with business results. They must be “interwoven into everything the association does to realize the maximum benefits,” as Dominique describes.
In addition to a DEI committee, executives can create an internal DEI fund that encourages employees to pursue diversity initiatives. They can assign a real budget to new programs and resources that promote diversity, equity, and inclusion. Financial commitments of this kind create a precedent for new DEI initiatives throughout the company, such as:
- customer acquisition: adapting value propositions to attract more diverse customers
- product innovation: creating products to address needs common to diverse populations
- talent acquisition: investing in new strategies for recruiting diverse candidates
- talent development: creating formal paths to leadership for diverse employees
5. Listen to Employees and Act on Those Insights
An insurance company’s success stems from the ability of its leaders to listen to employees with the most to gain or lose from DEI initiatives. For many insurance companies, these voices come from entry-level employees, not from those already sitting in senior decision-making roles. Executives can take advantage of these untapped insights by setting up anonymous surveys or focus groups, connecting with industry associations that specialize in DEI research, and engaging with an internal team of diversity champions who can strategize meaningful changes based on what they learn.
Next-Generation Insurance Starts with DEI
Insurance executives don’t need to look far to find a business case for DEI. A new generation of customers and insurance professionals are seeking out companies with missions that align with their personal values. “Millennials and Gen Z workers want proof of a diverse workforce and clear DEI benchmarks,” the Washington Post reports. The challenge of delivering on these expectations falls to insurance leaders and the diverse leaders of the future.
Communicating Your DEI Initiative
The next logical step is to communicate your DEI initiative internally and externally. If you don’t share your efforts within the company, how will employees understand your efforts, know what’s going on, and feel like they’re a part of the process? And, if you don’t communicate what’s going on externally, how will possible new recruits know they are welcome in your workspace?Need guidance on best practices? Liger can frame your message so that it remains on brand and demonstrates care and sensitivity so your company gets the most out of your efforts. We’re engaged in our own DEI effort, so we understand the challenges and the benefits. Talk with a Liger to learn more.