ACLI 4-Point Plan Focuses On Financial, Racial Equity

The American Council of Life Insurers’ ambitious, four-point inclusion initiative ranges beyond life insurance to areas such as affordable housing and broadband access to help address economic and racial inequality.

ACLI went to work on its Initiative for Economic Empowerment and Racial Equity in June as the country struggled in the early stages of the COVID-19 pandemic, which had helped deepen economic and racial disparities. The association’s leadership focused not only on life insurance and financial security, but also on serving a greater good with the group’s clout, said ACLI President and CEO Susan Neely in an interview with InsuranceNewsNet before the association’s virtual annual meeting.

“As America is reeling from the triple crises of the worst public health crisis in 100 years, the worst economic crisis since the Great Depression and a racial crisis, we're fully aware as life insurers that we have not just a responsibility, but we may be uniquely positioned to help advance economic empowerment and racial equity,” said Neely, who expected to announce the initiative in her opening remarks on Monday.

The Economic Empowerment and Racial Equity Initiative focuses on four key areas:

• Expanding access to affordable financial security in underserved markets. The life insurance industry is committed to building a more culturally diverse advisor community through recruitment, education and training. In addition, ACLI is working with regulators to break down unnecessary impediments to agent licensing so that more local advisors/financial professionals will be available to help people in their own communities. The industry also is looking to technology to help reach underserved markets and put more financial protection and security in the hands of more Americans.

• Advancing diversity and inclusion within companies and on corporate boards. Each member of ACLI’s Board of Directors has signed the Pledge for CEO Action for Diversity and Inclusion as part of their commitment to bring meaningful change in the business community. ACLI will encourage all of its members to make the same commitment.

• Economic empowerment through financial education. ACLI will form impactful financial education partnerships, like with the American College of Financial Services’ “Four Steps Forward” initiative, aimed at achieving economic empowerment through financial education. The partnerships will be focused on moving more households out of poverty.

• Expanding investments in underserved communities. ACLI will advocate for tax incentives and other state and federal measures that promote investments in underserved communities.

Neely said ACLI board members have been concerned about underlying economic and racial issues long before the pandemic, but one particular event precipitated the board’s action.
“Our member companies, as well as ACLI, have been focused on how we can make core financial security products like life insurance available to, accessible and affordable to more people,” Neely said. “That, and how we can have a more diverse workforce, and more diverse industry as a means to adapting more accessibility to life insurance products and just strengthening the teams were our goals before June. Then the nation watched the murder of George Floyd. And I think there's been a sense at ACLI amongst our leaders that it wasn't just a need. There was a mandate for us to step up and do more.”

The Next Step

Each of the four points of the initiative requires objectives, commitments, timelines and success metrics. Neely said some of that work has started with more to come.

“We are working with NAIFA and Finseca to support strategies to build a more culturally diverse advisor community through recruitment, education and training,” Neely said. “And we're working with regulators.”

Another area the ACLI is working on with regulators such as the National Association of Insurance Commissioners is the role of artificial intelligence in accessibility and underwriting.
“Our belief is that our underwriting practices should not discriminate either directly or indirectly, period,” Neely said. “We support a regulatory framework that eliminates any potential proxy discrimination, direct or indirect, in the delivery of life insurance to the consumer,” she said. “That's our stated position. We are not being mealy-mouthed about that.”

The association has an ad-hoc committee that includes data scientists, actuaries and corporate counsels working on reducing discrimination and making products more accessible and affordable.

“They were meeting six times a week at various points this summer to try to figure that out,” Neely said. “It's being directed by our CEO leadership, so it's a clear priority of ours. We want to be useful to the NAIC to NCOIL [National Council of Insurance Legislators] and others that are trying to figure this out. We're working overtime with a lot of smart people to try to figure it out.”

Neely added that AI through accelerated underwriting, for example, can help reverse rather than perpetuate discrimination.

“One of the powerful things about the use of AI is that the technology can actually create more fairness in pricing and make products more affordable and more accessible to more people, and that's the goal,” she said.

Serving The Underserved

Economic inequality as a whole is a broad area that the ACLI and its members are trying to tackle. Financial education is an important place to start, Neely said.

“There's an interesting statistics from the Wharton School that one-third of financial inequality in the U.S. could be accounted for by differences in financial literacy,” Neely said. ”That's quite powerful and it shows that's a leverageable point of opportunity.”

The organization is partnering with others to help improve financial literacy, such as the American College of Financial Services, which has its Four Steps Forward Initiative promoted by the college’s president, George Nichols.

That is just the start, Neely said. The association is looking beyond insurance and finance to help solve some of the issues underlying economic inequality.

“This really gets at advancing policies at the state or federal level that will incentivize voluntary investments in programs that can help underserved communities, like affordable housing, like access to broadband,” Neely said. “We're the long-term investors in this country – we actually held one-third of the Build American Bonds in 2009. That was a program of the Obama Administration to help America recover after the financial crisis, and we held about $60 billion worth.”

Neely said that was an example of a way that the industry can look beyond its immediate purview. These economic and community issues are inextricably linked to racial disparities.
“If you're trying to help lift a community of predominantly Black Americans out of poverty into a more prosperous position, you have to invest in core things that will be important to that, like affordable housing,” Neely said. “That can be vital to people's financial security that they have housing that they can afford, and then the ability to save and have emergency savings and support their families in the other ways that we know are important to financial security.”

The ACLI is working with members of Congress on several bills expected next year, such as a successor to the SECURE Act, which the ACLI helped shape and pass.

One of the gaps the pandemic revealed and widened was the access to broadband, which in turn affects the quality of education. The association is looking for incentives for voluntary investments that are harmonized with state regulation.

To anyone surprised by the wider scope, Neely would say that it is good for business, along with the greater good – and that the ACLI is uniquely suited for helping identify and advance effective initiatives.

The association has a long history of sorting through ideas to find the most effective one resolve conflicts with other initiatives and get them approved at the state level.

“Some of them overlap. Some of them duplicate. Some of them work at cross-purposes. Those are the kinds of things that ACLI is well-positioned to delve into,” Neely said. “So, we go back to our core strength. We're the long-term patient capital in this country. We make these kinds of investments. We want to make these kind of investments to help underserved communities become more prosperous. That becomes a whole body of work right there.”

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected]