The life insurance and financial services industries have long known they have a diversity deficit, but George Floyd’s excruciating death in May spurred the industries into action.
Some organizations such as the National Association of Insurance and Financial Advisors already had initiatives in the works that they accelerated, and others pulled together new initiatives to tackle some old problems.

And sometimes the renewed perspective heightened tension on some initiatives, such as the National Association of Insurance Commissioners’ working group producing a Principles for Artificial Intelligence document.

The principles included the phrase “AI users should proactively avoid proxy discrimination against protected classes.” For some, that went too far. Support grew to amend the language to allow for different variables to be considered.

Iowa Insurance Commissioner Doug Ommen used the example of hypertension. While there is a proven link between hypertension and race, science also shows us other links, for example, between hypertension and smoking.

Birny Birnbaum, executive director of the Center for Economic Justice, scoffed at that notion. Variables can be used to predict a particular relevant outcome, he noted, they just can’t be used to discriminate against a protected class.

Regulators adopted a final version of the AI principles with compromise language.

As efforts get underway across the industry to confront racism and promote equality, the NAIC experience is a reminder of how difficult it can be to reach a consensus when solutions conflict with other industry values. But regulators say they are committed to addressing racial inequities in insurance with more than talk.

“We need people to be intentional about diversifying our departments, diversifying the industry, diversifying your company,” Ricardo Lara, California insurance commissioner, said on a recent podcast. “And, yes, you’re going to get pushback. But stay the course.”

The NAIC formed a Special Committee on Race and Insurance, which held its first meeting in September. The committee started with four general areas of interest:

» The current level of diversity and inclusion within the insurance industry, the insurance regulatory community and the NAIC.

» Access by people of color and historically underrepresented groups to insurance products and coverages.

» The existence of current practices or barriers in the insurance sector that potentially disadvantage people of color and/or historically underrepresented groups in the areas of (a) life insurance and annuities, (b) health insurance, and (c) property and casualty insurance.

» Steps insurance regulators and/or the insurance industry can take to (a) increase diversity and inclusion within the insurance industry, state insurance departments and the NAIC; and (b) address practices that potentially disadvantage people of color and/or historically underrepresented groups.

‘It Is So Important’

Lara joined a trio of minority insurance regulators for an NAIC podcast to discuss the state of race and insurance. The three insurance commissioners all noted changes they had made in their states to better serve minority populations.

Connecticut Commissioner Andrew Mais, for example, took office in March 2019 and found that all of the department’s examinations were in English only.

“The exam is available in Spanish now because it is so important,” said Mais, who is Black. “If your community is not represented, it will be ignored. And that’s why I think it is so important to the industry and to us as regulators that we all have a seat at the table.”

In California, Lara oversaw a 2019 investigation into auto insurance discount practices.

“We found evidence of really disturbing inequities,” he said. “So many insurance companies were effectively using group discounts to cherry-pick members, giving some higher income occupations essentially a fast pass, while people from certain racial and ethnic groups and lower income motorists were left in the slow lane, essentially.”

The California Department of Insurance proposed regulations to tighten up oversight of auto discounting practices.

While the publicity is great news for the industry, action is most important, reminded Sonja Larkin-Thorne, a consumer advocate and retired insurance executive.

“When I started in this industry in 1974 in California, there really was a push by many companies to include diversity as part of their corporate culture,” Larkin-Thorne said. “I have seen the decline in that push and in that commitment over the past 40 years.”

t’s not the products, said Larkin-Thorne, who is African American, it’s the access to the products that is limited for people of color.

“There are too many barriers that exist today that didn’t exist when I started in this business 40 years ago,” she said. “We used to be a hands-on business where underwriters and agents knew each other, knew their communities, understood their consumers. That’s moved away now to just a paperless society where we look at what a statistical touchpoint tells us.”

Push To Diversify

Minorities have long been underrepresented in the financial services industry, and 2020 seems to be the year that industry groups are making a push toward attaining more diversity. The goals are twofold: to attract and retain more Black professionals, and to serve a community that needs help in building wealth.

In August, The American College launched “Four Steps Forward,” a program aimed at helping the Black community attain upward mobility and wealth building. The program’s four goals are:

1. Assist 1 million Black women in completing a financial literacy and well-being program by 2025.

2. Work with other organizations and professionals to create lasting change in how Black communities view and create wealth. Establish a platform that includes financial and investment tools in partnership with individuals who understand policy impact.

3. Build a pipeline of Black leadership in the industry by identifying next-generation Black leaders at financial services firms and develop their leadership, interpersonal and relationship skills. Give them access to pathways that can guide them from middle management into positions of corporate power and influence.

4. Recruit more Blacks into financial services, develop a study-group blueprint that equips Black professionals with the knowledge to get these groups off the ground, and rally financial services firms and trade organizations to identify top advisors to serve as mentors and coaches for these professional study groups.

The College is not the only industry organization examining the issue of diversity.

Because of COVID-19 restrictions, The National Association of Insurance and Financial Advisors was unable to hold its annual Congressional Conference in person this year. Instead, NAIFA turned the session into an online event called “Impact Week.” One day of that week was devoted to a Diversity Symposium, in which industry leaders discussed their experiences and challenges relating to being a minority in a mostly white and male industry.

In addition, NAIFA in August released a position paper, “Diversity And Inclusion: Serving The African-American Community.” The paper reported that although about 13% of the U.S. population is Black, only about 5% of the advisor population is.

Education is usually a first step in understanding how to recruit and retain minority agents and advisors, as well as how to teach all agents to successfully sell to diverse markets, the NAIFA report said.

The National African American Insurance Association conducted a series of online discussions over the summer, covering such topics as “The Legacy And Future Of The Black Agent” and “Racial Bias: Check Yourself Before You Wreck Yourself.”

How To Be An Ally

EXAMINE YOUR OWN BIASES: Before I could become an empathetic change agent, I needed to examine my own heart.

SEEK OUT MARGINALIZED VOICES AND PERSPECTIVES: How many marginalized people do you follow on Twitter or Instagram? How many minority authors do you read? To grow my capacity as an advocate and ally, I had to deepen my understanding of the plights of minorities.

BECOME INTOLERANT OF INTOLERANCE: Next, plant the flag that racism, discrimination and intolerance won’t be tolerated anymore. Make this declaration in your heart and decide to engage in your spheres of influence when you have the opportunity to do so. Speak up and speak out.

MAKE INCLUSION PART OF YOUR DAILY LIFE: If you are in any position of authority, be it at work or for an organization or club, you have an opportunity to be more inclusive of people from other backgrounds and communities. But a mistake that’s easy to make is thinking that simply not discriminating is enough.

CONNECT WITH AND SUPPORT MARGINALIZED MOVEMENTS: If you come from a place of privilege, use that privilege to help minority groups. Attend a Pride march. Join a minority chamber of commerce. Go to a Black church. Find the right outlets within your community and connect! When people ask what you’re doing there, say, “I’m here to support you.” Then ask them how you can do that. Become an engaged ally who's willing to learn from minority leaders what makes an actual difference, because it might not be what you think.

— Brian Haney, The Haney Group, Silver Spring, Md.

From NAIFA report “Diversity And Inclusion: Serving The African-American Community”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.