How tackling a lack of diversity in insurance can strengthen relationships with customers, employees, shareholders and society as a whole

30 May 2017

By Jon Terry

Women as customers are a huge opportunity for insurers, but there remains a large gender gap in leadership roles in the insurance industry with women representing just 20% of Boards and 12% of executive committees. Firms need to be able to understand and relate to their customers to be able to best serve them, and the lack of gender equality in the industry is a significant challenge. 

Companies often explain this gender gap by highlighting the shortage of women in their talent pipelines. There is no doubt that a number of insurers have been focusing on this issue and taking steps to address it, with 76% of financial services employers actively trying to attract and recruit more women. The insurance industry should be applauded for recognising that change is needed and for the steps it has already taken, with 94% of insurance leaders saying they promote diversity and inclusion within their organisation.

But more needs to be done. For example, 28% of women working in financial services believe that employers are too biased in favour of men when recruiting, a similar percentage as two years ago. Recruitment is one issue, another is development - with a lack of opportunities to progress cited as the number one reason for women leaving their jobs in financial services.

There is no doubt in my mind the insurance industry understands that creating a more inclusive workplace has many benefits and a number of firms are focusing hard on the issue. But, for too many it is perhaps not being treated as a priority business issue, which I believe is required.  In my view there is a mounting risk that customers will become more discerning and more inclined to do business with those insurers whose culture and values reflect their own. In addition, not moving the equality dial fast enough runs the real risk of not be able to recruit and retain a more diverse set of people, creating a major talent risk.

Others are watching

Focus on fairness, equality and diversity has ratcheted up significantly over the last few years from the media, the public, government and regulators. The UK’s gender pay reporting legislation is just one of a number of initiatives designed to level the playing field.

Shareholders increasingly want assurance on anything that affects an organisation’s reputation and, as a result, they are beginning to be more probing in their questions on diversity and inclusion.

We should also expect to hear more from regulators, as diverse talent pools and leadership teams are viewed as encouraging greater debate within a business, guarding against the risk of blinkered decision making. Regulators may soon begin to challenge the culture within less diverse organisations.  

Gender pay reporting provides both a challenge and an opportunity for the industry. It is highly likely that the gender pay gap (that all firms with 250 or more UK employees are required to report by April next year) will show some high numbers for many insurers. The average gender pay gap in the UK is approximately 18%, with the Financial Services sector having the largest (somewhere around 35%). With the shortage of women in senior roles in the insurance sector and large numbers of women in the lowest paid jobs, there is a distinct possibility that some insurers will be reporting above average numbers. Clearly this is a major reputational risk that needs to be managed – otherwise the customer and talent issues are likely to get worse. But, if the sector gets on the front foot, is open about its numbers, the reasons behind them and, most importantly, what it intends to do to address the issue, it can come from behind by being open and commit to real change.  

What the insurance industry can do to improve diversity and inclusion

  • Work together to share experiences and lessons learned and use these to influence the actions the industry as a whole will take.
  • Be more transparent about its journey towards becoming an inclusive workplace. Be as open as possible, even on its shortcomings.
  • View diversity and inclusion as a strategic imperative and build it into firm’s risk registers – progress should be tracked in the same way as other reputational risk.
  • Firms should communicate and action their diversity and inclusion strategy clearly and regularly, to ensure current and potential employees mean what they say.
  • Get the fundamentals right – powerful support and tone from the top, policies and processes updated through a diversity lens – including recruitment and promotion processes, flexible working and pipeline talent identification.

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