RACE & ETHNICITY
Diversity drivers: regulators, rating agencies and investors
From customers to regulators, rating agencies and investors, each stakeholder has its role to play in driving diversity—and beware the company that doesn’t listen.
The whole world is taking about environmental, social and corporate governance (ESG) issues, said Sima Ruparelia, non-executive director at British Gas and chair of the Insurance Supper Club Racial Justice Working Group.
“The younger generation in particular are very much more about equity, social engagement, governance, and environmental issues,” she said. “If people start buying their insurance based on those things, and I think they will as time goes on, that ‘S’ part is a big part of it.”
Speaking on an Intelligent Insurer panel on race and ethnicity, Ruparelia added: “If I’m a customer, I want my insurer or whatever businesses I interact with to represent me, and if I’m not represented how can you be a big global insurance company representing the people across that globe?”
But it’s not just customers that are compelling the industry to reckon with diversity, equity and inclusion (DEI). Regulatory change may be afoot.
Margaret Spence, chief executive officer and founder of the Inclusion Learning Lab, explained that some regulatory agencies in the US are considering standards that the industry should adhere to.
This includes a global diversity and inclusion standard issued by the International Organization for Standardization (ISO) in May last year, which covers actions, principles, measures, and their associated accountabilities and responsibilities.
Spence said: “Once regulatory agencies start saying ‘how much diversity do you have on your boards, within your staffing and within your business units?’, we’re going to see a shift.
“The question is, should we wait until then? I don’t think we should. What we have to do is agitate a little bit more, it is a business imperative. We are selling to a more diverse marketplace than we have ever before, the marketplace is shifting.”
“I want my insurer or whatever businesses I interact with to represent me.”
Sima Ruparelia, British Gas
Kael Coleman, founder and chief executive officer of Protecdiv, added that over the coming years, he expects more outside stakeholders to start demanding change. He noted that ratings agencies are starting to ask questions about diversity and, over time, this could become a rating factor.
“When things like that happen, whether it’s through rating agencies, regulators or other outside stakeholder pressure, then we’ll see a pretty rapid change because people will figure out very quickly how to get over their unconscious bias.”
The business case for diversity
On the business case of diversity, the panellists quickly listed innovation as a top factor.
Coleman said: “The threat to the industry is lack of innovation. That maybe doesn’t matter to current senior leadership but it should matter to various backers who invest in us as an industry.”
He said that while the legacy insurance industry had survived the insurtech revolution, if the insurance industry isn’t able to innovate before the next disruptive thing, “that thing is eventually going to take all our jobs”.
“If you work with a diverse team, you get different ideas, you challenge the status quo and you innovate significantly better,” he said.
Natasha Scotland Courcy, senior vice president, general counsel and chief operating officer of Athene Bermuda, and chair of Bermuda International Long Term Insurers and Reinsurers (BILTIR), added that innovation drives profitability.
“When this starts impacting a company’s bottom line that’s when it’s going to start bubbling up even more,” she said.
“If you work with a diverse team, you get different ideas, you challenge the status quo and you innovate significantly better.”
Kael Coleman, Protecdiv
Scotland Courcy added that the younger generation of employees that the re/insurance industry is beginning to attract, want and expect diversity to be part of an organisation’s DNA.
“Companies are going to be shooting themselves in the foot if this isn’t an area of focus for your organisation. If people aren’t seeing that externally they won’t want to be part of your organisation,” she said.
While external stakeholders can help drive the industry, this business change must come from within the company.
“Until the CEOs step up and put their money where their mouths are, we will not see business change. The current CEOs in the industry can make a difference here,” said Spence. “For me, if a CEO is super committed to this then s/he will hold the leaders accountable, and make the accountability have some teeth.”
Ruparelia acknowledged that sometimes companies and people find it hard to talk about race, including what language to use and how to train managers. The Insurance Supper Club Racial Justice Working Group is building education programmes for the London insurance market.
The events, hosted with CEOs involved, will help “get the right materials to drive this forward in the industry”.
It seems that, overall, beneficial initiatives and a desire of companies to move DEI in the right direction do exist but perhaps a push from external stakeholders is needed to increase efforts from a slow simmer to bubbling over.
“This is societal issue, it’s not in a silo. We’re talking about an insurance space that’s reflective of broader society. What can we do in our space to further this dialogue and to make progress? The frustration is very much there.
“We’re making progress—it’s steady but sometimes slow and steady wins the race,” Scotland Courcy concluded.
Image: Shutterstock / Gorodenkoff
