Dialling up D&I

If anyone needed a timely reminder of how seriously D&I is being taken by the corporate world, the sudden departure of QBE CEO Pat Regan is a good example.

The announcement that Regan was stepping down after failing to meet the company’s “conduct and ethical standards” was fairly oblique, but added that an external investigation into “workplace communications” at the firm led the board to conclude that he had “exercised poor judgement” with regard to its commitment to a “respectful and inclusive environment”.

With Covid-19 turning up the dial on corporate empathy as companies attempt to align their public image with popular sentiment on a range of social and political issues, the conversation around diversity and inclusion (D&I) in the (re)insurance sector is also getting louder.

However, despite public statements from company CEOs and industry bodies on D&I, there is a risk that much of this chatter, like the accusations of ‘greenwashing’ that have dogged some companies’ environmental pledges, could be deemed as no more than lip service – ‘woke-washing’, if you will.

There are a number of initiatives that indicate a willingness by the (re)insurance industry to enact cultural change.

The annual Dive In festival was launched in 2015 by a group of Lloyd’s carriers, via the Inclusion@Lloyd’s steering group, to drive the D&I agenda in the industry.

The festival has grown from a London-based event to a global one, across more than 30 countries – with buy-in from global insurers, brokers and service providers to the (re)insurance sector.

However, Lloyd’s central role in this respect, championed by former CEO Inga Beale, is still no guarantee of engagement with D&I objectives by the wider industry.

Speaking to D&I champions in the London market, it is clear (re)insurance still has some way to go to catch up with the rest of the financial services sector.

“In terms of financial services, [insurance] is probably behind the curve compared to banking and asset management,” says Maurice Rose, manager of insurance risk and regulation at PwC and chair of the LGBT Insurance Network (Link).

“Lloyd’s and the London market in particular still operate in a very archaic way and a lot of the individuals are very traditional and potentially outmoded in their ways of operation and thinking,” he adds.

The banking and professional services sectors, having started their journey a long time before the insurance industry, are typically “better across the D&I spectrum [and] probably seen as more inclusive within the insurance ecosystem”, Rose says.

Jane Harley works in the performance management directorate at Lloyd’s, managing compliance oversight of coverholders. She is also co-chair of the Gender Inclusion Network for Insurance (Gin).

She suggests that while there has been progress on D&I in insurance, it has been slow.

“Lloyd’s has now [introduced] the gender targets for everyone to reach, which is great, and it’s great that we’ve got more [women] on the senior team – from the senior managers to exec level to board level – but that doesn’t mean that the gender pay gap is going to balance itself out,” she says.

“Also, in terms of equality in general, we tend to find that as you get more senior, people have similar backgrounds. So, on that diversity side, how do [firms] have an open table for everybody, no matter what their background, to progress to the same level and at the same speed?”

At the end of July this year Lloyd’s announced a new annual Culture Dashboard, based on data gathered from the market across cultural indicators including gender, ethnicity, sexual orientation and disability.

The initiative was accompanied by the gender targets mentioned by Harley, aiming for parity between men and women over the next decade, with an interim target of 35% female representation in leadership positions (board, executive committee (ExCo) and ExCo direct reports) by 31 December 2023.

But do the Lloyd’s targets go far enough towards achieving the goal of gender parity?

Sheila Cameron is chief executive of the Lloyd’s Market Association and a member of Inclusion@Lloyd’s, as well as being a member of the Lloyd’s Culture Advisory Group, which produced the gender targets.

“We reviewed this at the cultural advisory group and I can tell you that there was a lot of heated debate on that exact topic – are we being bold enough with where we want to get to,” she recalls.

“This is a market heavily driven by data – so they want to know what the data say and what is achievable within the data.”

Lloyd’s worked with Accenture on creating a model for assessing what was actually achievable in increasing the representation of women in leadership positions from its current level of 29%.

“Depending on how you turn the dial on the variables, it came out at between 33% and 35% as achievable,” says Cameron. “If you look at the Women In Finance Charter, what they’ve achieved on average is an increase of 1% a year. We’re saying we want to go harder and broader – board, ExCo and direct reports to ExCo – and we’re talking about doubling that and going up 6% in three years.”

Lloyd’s has also pledged to improve its approach to collecting data on ethnicity and other characteristics, alongside its commitment to increase representation of black, Asian and minority ethnic colleagues across the market.

At present, says Lloyd’s, only 52% of firms in the market provide data on ethnicity and other protected characteristics. The Corporation is now pushing for all firms to collect and report the data in future.

However, in increasing the level of reporting, Cameron points to a complication – especially with respect to ethnicity data.

“There is a significant proportion of employees, even within those firms, who prefer not to say what their ethnicity is,” she says.

Indeed, a look at the Lloyd’s Culture Dashboard indicates that, of the 43% of firms with available data on ethnicity, the average disclosure rate amongst workforces is 49%.

Of those disclosures, only 4% identified as Asian, and 1% apiece identified as black or mixed ethnicity, while a massive 36% indicated that they’d “prefer not to say”.

This compares with 1% of respondents who preferred not to disclose their gender, 8% their sexual orientation and 5% for disability.

“We’ve always known the industry has struggled with gaining the relevant data for ethnic minority representation,” says Godwin Sosi, a management liability underwriter at Sompo International.

Sosi is co-founder, along with Tokio Marine Kiln (TMK) cyber underwriter Junior Garba, of the African-Caribbean Insurance Network (ACIN).

The ACIN was launched two years ago, supported by TMK and Lloyd’s, with a view to boosting black, Asian and minority ethnic representation in the industry and improving the “cultural competence” of the London market.

“It’s going to become mandatory for companies very soon to start declaring ethnic minority data,” says Sosi, praising the lead taken by Zurich in the market in declaring its own ethnicity data.

“Yes, the numbers aren’t too great, but that’s what you’re putting out there – this is where we stand and [this is] how we need to change it.”

However, the current lack of ethnicity data also masks a wider problem with representation in the industry.

To tackle this, the ACIN launched its Six Steps to Racial Inclusivity research paper earlier this year, and has been presenting its findings to organisations in the London market.

“We really wanted to hammer [home] for the people at the top some understanding of the issues faced [by ethnic minorities] in the corporate environment,” says Sosi.

“Having to do a job, nine to five, five days a week, for however many years, where you can’t be yourself [makes for] a very long day. You want to go somewhere where you feel you can be yourself.”

The paper draws on experiences from 50 black professionals across 20 companies in the insurance industry.

“The common denominator with the feedback we got was the lack of inclusion within certain companies,” explains Sosi. “[We’re] bringing the talent into the industry but then, because of the lack of inclusion, that talent doesn’t really stay.”

Kishan Mangat is a senior associate in the London office of law firm DWF and co-chair of the steering committee at the Insurance Cultural Awareness Network (iCan), a cross-network organisation which focuses on multicultural inclusion in the industry.

The organisation has three main initiatives: an online, self-service mentoring platform called Inspire, launched last year in conjunction with the Worshipful Company of Insurers and PwC; iCan Apply – effectively an online jobs board run in partnership with a recruitment firm; and a publication launched in concert with the Chartered Insurance Institute titled Multicultural and International Role Models, which addresses the need for visible international and multicultural role models in the industry, featuring interviews with 35 insurance influencers discussing their diverse heritages.

Mangat says that iCan’s membership has similarly highlighted a retention issue amongst ethnic minorities.

“They don’t necessarily see opportunities for them to advance their careers in the market at the moment,” Mangat says. “There’s a lot of great work being done on early careers and for apprentices, but [not] a lot around when you are maybe four or five years in and want to take your career to the next level.”

“If you have built up this wealth of experience, you don’t necessarily want to lose that by leaving the market and going to a different sector altogether,” she continues. “But that’s what we’ve noticed happening in the past – we’re losing a lot of great talent.”

Gender and ethnicity are perhaps the most visible areas of the D&I spectrum. However, there are other groups whose protected characteristics need to be considered in the drive towards a more diverse and inclusive workplace.

“Lloyd’s released who was on the Lloyd’s board, and it’s great to see that actually there are more females,” says Gin’s Jane Harley. “Those characteristics you can see – but you can’t tell if somebody is from the LGBT community, or if they have disabled children or have a disability themselves.”

Laura Thomas is head of claims at Westcor International and market collaboration lead at the Insurance Disability, Ability & Wellbeing Network (iDawn).

She says the network takes “a holistic approach to wellbeing”, encompassing issues of mental health, mental and physical disability, and neurodiversity as well as tackling other wellbeing issues such as financial health.

Thomas says iDawn is focused on “raising awareness and trying to break through stigma”, but she also stresses the network’s commitment to driving positive change.

“The industry is starting to acknowledge that mental health, wellbeing and disability in general is actually really important,” she says.

“The main thing I’ve seen, growth-wise, over the last few years is more ERGs [employee resource groups] popping up. It’s fantastic that actually we’re starting to have those conversations.”

At the same time, she says, companies are also rolling out mental health first aid training schemes, and iDawn has been involved in producing a version tailored to the insurance industry.

“In some ways the financial services industry is really leading the way. Barclays did its This is Me campaign and that really got the ball rolling – and that led to the Lord Mayor’s Green Ribbon campaign, which was fantastic.”

However, problems remain, Thomas says. “I do still feel it is a bit of a taboo subject – you’re not really being your whole self if you can’t just be honest with somebody about how you’re feeling or if you’re having an off day.”

“The biggest thing we are still hearing from our members is that their manager or their HR [department] just don’t understand how they are feeling,” she adds. “As an industry we need to give more training and support to managers and staff, to give them the confidence to have those conversations and to help support their colleagues.”

Link’s Rose also underlines the importance of being able to be yourself in the workplace.

“Ultimately, if you can’t bring your whole self to work, you’re not going to perform at your best and therefore, when it comes to career progression, you might not be performing as well as your peers because of this additional burden,” he says.

“There are often very different lived experiences of individuals even within those firms that, to the external world, are doing and saying the right things,” he continues.

“There is still a level of discrimination amongst the market for LGBT individuals and it’s quite common that individuals who were ‘out’ at university will go back into the closet once they start in the world of work, because they don’t feel comfortable in that particular environment – especially within the insurance industry; it’s quite an alpha male, macho environment.”

Rose says Link’s mission is “to attract and retain the best LGBT+ talent to the insurance industry” through networking opportunities and educational activities.

He says that the larger firms in the industry are typically better at engaging. “They invest more heavily in D&I, they have the resource dedicated to it and they have more employee resource groups,” he says.

By contrast, some smaller firms may have a lesser focus on D&I and are also “more traditional in their way of doing things, so are potentially further behind in their journey”.

However, he adds: “We’re finding [that] some smaller organisations are looking to take advantage of the Link model [instead of] setting up their own internal network. So for these smaller organisations, there isn’t really an excuse to say they can’t be diverse and inclusive.”

While announcing targets and engaging with networks is a meaningful step, this is still some way from actually implementing change.

Pia Sanchez is a senior consultant with specialist employment and partnership law firm CM Murray. She advises companies on a wide range of employment issues and also works with in-house with legal and HR teams on training programmes.

Sanchez says that while a number of companies have issued statements on D&I topics, one reason that it has taken some bigger firms so long to take action to address issues such as the under-representation of ethnic minorities is that they are “a bit worried about positive action, how it works and what is permissible by law”. “It’s poorly understood generally,” she says.

The Equality Act 2010 allows for employers to take “positive action” to improve diversity in the workplace. Organisations can lawfully implement measures to directly address the inequalities experienced by members of groups with protected characteristics – where they have a disproportionately low level of representation, suffer a disadvantage due to those characteristics, or have differing needs to people who don’t share the same protected characteristic.

Where an employer has identified groups or individuals that have been disadvantaged, it can take steps to encourage greater participation from those under-represented groups as long as those steps are proportionate to the aim.

But before taking such measures, companies need to assess the scale of under-representation to ensure the steps are appropriate – giving blanket preferential treatment to one group is not permissible under the law.

“One of the difficulties that I see for smaller organisations, is that to make an assessment of disadvantaged groups to work out what positive action steps might be appropriate, you’ve got to have some kind of data to show the disadvantage or low participation,” says Sanchez.

“At the moment there is no requirement on companies to collect data and even if data has been collected, it might be patchy, because giving it is entirely voluntary. If an organisation does not have statistics or monitoring data, it could rely on information obtained from consultation with workers, trade unions and representative bodies or use data from national surveys”.

There is a broad consensus that far more consideration is needed from companies to ensure those from diverse backgrounds are progressing up the career ladder.

“When you’re focusing on ensuring that you have a pipeline of leaders from a more diverse background, that you have to work on every part of that pipeline,” says iCan’s Mangat. “Not just bringing all of these diverse candidates into your business, but thinking about how you retain them, and also how you measure it.”

She is optimistic that mandatory reporting for the ethnicity pay gap is on the way, albeit in her view “not for another couple of years”, but in the meantime, she says, firms in the insurance industry should be looking at ways to collect that data.

“If you can’t articulate what percentage of your firm comes from a particular background then how can you start talking about the pay gap? What gets measured gets done,” says the LMA’s Cameron.

She points to one problem with measuring the gender pay gap in the UK, for example. A significant proportion of firms fall below the minimum employee threshold [currently 250 employees] for mandatory reporting of pay gap data.

But, to echo Rose’s point above, it’s not just scale that can be a brake on companies’ ability to enact change – it’s also a question of willingness.

“A company that just doesn’t want to engage, doesn’t have to take positive action steps as there is no legal obligation on an organisation to do so,” says CM Murray’s Sanchez. “But if they don’t take steps to improve diversity and be part of wider societal change, is it ultimately going to have a financial consequence because they do not adequately represent the composition of the national workforce, their clients, etc. It probably will and this is an issue of concern for many employers.”

She says one issue that has come up in discussions with clients is the interplay between a company’s credit rating and its relevance to customers.

“If your company is being run by a group of people who don’t represent [buyers], how can you be relevant?” she says.

And it’s perhaps this last point that will drive the (re)insurance sector towards an inflection point on engagement with the D&I agenda – if it is viewed as a profitability issue as well as a cultural one.

Cameron says that she has seen a “groundswell of change” amongst the CEO community in relation to D&I issues.

“One CEO said to me: ‘I see this as a business problem. If I have a business problem, I set a target, I put in place a series of actions and I hold people accountable for it – and that’s how things get done. Why is this any different?’”