Diversity on a team and within a business increases profitability. However, most small insurance companies lack a plan or strategy for hiring and building a diverse staff.
3 months ago • 5 min read
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Diversity on a team and within a business increases profitability. However, most small insurance companies lack a plan or strategy for hiring and building a diverse staff. This is Part One of a two-part article that will show the economic and pragmatic benefits of diversity. Part Two discusses actionable steps to embed diversity into the hiring strategy.
The insurance industry is hiring. This message has been proclaimed loudly, clearly, and statistically for about a decade.
Diversity is a “must-have” when hiring. This detail has been proclaimed just as loudly - but somewhat less clearly and statistically - for the past few years.
Insurance organizations must accomplish dual goals while hiring:
1) increase the industry’s attraction factor, while 2) also increasing its strategic commitment to diversity.
Global insurance companies know this and have implemented industry attraction and DEI (Diversity, Equity, and Inclusion) strategies. Many national and regional insurance entities are also raising the industry’s profile to attract new employees while strategically reaching into historically underrepresented and diverse communities. (The Forbes 2021 list of Best Employers for Diversity includes 38 insurance companies.) Small and mid-sized insurance organizations are discovering resources for diversity hiring and creating DEI strategies.
Principals and managers of an SME insurance business, whether agency, brokerage, MGA, or vendor, maybe in a situation like this:
In its fifth annual survey, Vertafore asked 1300 insurance agency owners and principals about their employment retention strategies and hiring challenges. “When we asked owners what recruiting issues they had in 2021, the most significant was ‘finding qualified applicants’ followed closely by ‘not enough applicants.’”
Finding new employees is hard. Finding new employees without a strategy for increasing diversity outreach is harder. Employable adults are becoming more diverse as a percentage of the workforce (more on this, below).
Insurance businesses must use diversity hiring channels to increase - and arguably, to maintain - an effective hiring reach.
Scott Purviance, CEO of insurance brokerage Amwins writes, “Implementing this change [increased diversity hiring] will not only be good for humanity, but it will also be good for business. Diverse people deliver diverse thought, and diverse thought delivers better outcomes that encourage creativity, spawn innovation, and enhance profitability.”
Profitability improves with diversity.
“The most diverse companies are now more likely than ever to outperform less diverse peers on profitability. Moreover, we found that the greater the representation, the higher the likelihood of outperformance.” This is true for diversity in ethnicity, gender, and other characteristics..
Innovation improves with diversity.
The Boston Consulting Group’s 2017 study uses definitive statistical methods to link increased diversity with positive revenue from innovative outcomes. Companies with above-median diversity generated 33% more of their revenues from innovative products and services.
A diversity mindset is not about making a token hire or implementing checklists for legalistic reasons. It is about making an outreach to include more people in your hiring audience and give them the opportunity to show you, the hiring manager, that they are the best person for the job. Here is an example with legal consequences, of how not to implement diversity outreach.
“A resilient organization foresees upcoming threats and capitalizes on opportunities, which, as focus group participants noted, is helped by having a diverse team. It is also a risk professional’s role to underscore the downsides of failing to embrace DE&I,” says the Marsh/RIMS report. A lack of diverse representation in executive management and Boards of Directors could potentially impact a business’s D&O policy.
“A number of lawsuits were filed against several high profile companies… regarding the lack of diversity on their boards of directors, senior executive leadership teamsand overall employee base.”
Much of the insurance industry workforce is aging out of their employment years.
Mark Anquillare, COO and Group President at Verisk, summarizes several hiring needs within the insurance industry, emphasizing: “The 65-and-older population grew more than 34 percent over the last decade, according to the U.S. Census Bureau. It’s expected that the [insurance] industry will need to hire 500,000 new professionals over the next several years, a fifth of today’s insurance workforce.”
The workplace is becoming more diverse on its own. Nationally, the minority population is becoming a majority.
Increased diversity in the labor force, your customers, and your suppliers is happening now. Within the next five years, the younger employment age group (those under age 30) will be majority non-white.
The increase in diversity across younger populations affects your company’s…
Employee relevance and retention
The move toward a more inclusive corporate culture is a way to attract and keep employees.
Today’s talent — especially Gen Z and millennials — wants an employer that is committed to diversity. DE&I is also imperative to business resilience. A May 2020 McKinsey report suggests that the relationship between diversity on executive teams and the likelihood of financial out-performance has strengthened.
Customer relevance and retention
Your customer base over the next 40 years will develop into a group of greater variety and diversity. Customer retention is much more likely when your customers see themselves represented in your company, your team, and your employees.
Succession Planning and exit strategy
The Vertafore “Insurance Agency Workforce” survey found that nearly half of agency owners and principals will retire by 2027. This is also the year when [the] US white majority will become the minority in certain age groups, beginning with ages 18 to 29. If you hire with diversity as your strategy, then your employment force will look like your customers and labor market. This representation will make your agency more attractive to successors, in a sale of the business to either an internal or external buyer.
Special thank you to the author of the article, Audry Torrence, who is an Executive Vice President at Stephens Rickard Ltd., an executive search and recruiting firm serving the property and casualty insurance industry. She is passionate about contributing to the industry and can be reached at email@example.com or through LinkedIn and Twitter.
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