Insurance gender pay gap narrows to 30% but still over double UK average

The UK insurance industry’s median gender pay gap continues to lag significantly behind that of the broader UK plc, despite minor improvements year on year.

Eligible UK firms have been required since April 2018 to provide a snapshot of their median and mean hourly pay and bonus pay gaps, as well as the proportions of men and women in each of their pay quartiles, dated from the previous April.

However, due to the ongoing Covid-19 situation, the government removed its requirement for all companies to report their gender pay gap data for 2019, meaning that the number of companies taking part this year is significantly lower than in the previous two years.

According to analysis conducted by Insurance Insider, just 28 risk carriers and 12 broking firms completed the data entry task this year, as of 12 May 2020, compared with 44 carriers and 21 brokers last year. As such, Insurance Insider has only used the firms that have submitted data for 2019 in its charts and used the same cohort for the year-on-year comparison.

But those that reported in the insurance industry this year generated an average median gender pay gap of 30 percent for 2019 and 30.3 percent in 2018.

Across all UK companies, the average median gender pay gap for 2019 was 12.9 percent in 2019 and 11.9 percent for 2018.

The pay gap numbers follow a year in which the London market in particular has come under fire for culture issues and its failures to address gender equality.

Lloyd’s has made culture one of its top three priorities as it forges ahead with its wide-ranging market reform, with a number of diversity and inclusion initiatives underway and the creation of a Lloyd’s culture advisory group to push through change.

Other key findings from our research include:

Retail insurers still outperform London wholesale and specialty carriers, with Admiral the clear outperformer with a median gender pay gap of 4.5 percent.

FM Global and Swiss Re are the two carriers with the largest median pay gaps out of those companies that have reported.

Lloyd’s carriers Barbican, Beazley and Canopius are among those to register the largest pay gap improvements year-on-year.

As a group, the 12 brokers that reported their median gender pay gap have made no progress at all over the past three years.

BGL and Marsh were among the best-performing brokers, while JLT Re still has a median pay gap of over 50 percent.

The full ranking of insurers and brokers according to their 2019 pay gap figures can be found at the end of this article.

Risk carriers have seen their median gender pay gap tick slowly down over the past three years, reporting an average of 27.3 percent for those that reported 2019 data.

This compares with an average of 27.9 percent for the same cohort’s 2018 data and 29.6 percent for its 2017 data.

Once again, retail insurers performed far better than their reinsurer, wholesale and specialty peers, with UK retail insurer Admiral scoring the best gender pay gap for the third year running, with a median gender pay gap of 4.5 percent.

Admiral noted that in its top pay quartile, the roles were still skewed 68:32 in favour of males, but that it was working hard to change that in the future, including improving flexible working practices and parental leave, and issuing clearer instructions for gender balanced shortlists for key roles.

Credit and surety specialist Atradius reported a median gender pay gap of 17 percent for 2019, an improvement of 1.1 percentage points on 2017’s figures, but 0.4 percentage points worse than in 2018.

Atradius attributed this year-on-year worsening to “known staff movement in the period, in particular where reassigned roles have moved between pay quartiles and thus affected the gender pay per quartile”.

Of the reinsurers who reported this year, Munich Re came out on top with a median gender pay gap of 22.3 percent, some 9.7 percentage points better than in 2018 and 13.6 percentage points better than in 2017.

At the other end of the spectrum, the three firms with the largest median gender pay were FM Global (49.6 percent), Swiss Re (39.9 percent) and MS Amlin (37.9 percent).

Swiss Re and MS Amlin’s reported numbers were an improvement on the previous year, by 0.4 percentage points and 1 percentage point respectively, but FM Global’s median gender pay gap worsened by 0.6 percentage points.

FM Global said that as a property specialist, many of its entry-level new hire positions required an engineering qualification, generating fewer female employees.

“As a career-employer, our aim is to develop and promote our employees into senior roles. These factors, coupled with a long tenured workforce and high employee retention, result in FM Global having more men than women in senior roles which tend to be more highly paid,” it added.

Swiss Re, meanwhile, said it remained “uncomfortable” with its gender pay gap, and saw it as its responsibility to address the underlying reasons behind the gap.

In 2019, 30.1 percent of its UK workforce in the upper-middle and upper quartiles were women.

To counter the problem, the carrier has embraced a new D&I strategic plan, based around three principles: being yourself at work; gender balance across the organisation; and building intergenerational bridges to foster understanding among generations and strengthen the link between younger and senior professionals.

And Iain Pearce, CEO for MS Amlin Corporate Services, noted in its report that the carrier had made significant operational changes – flexible working, inclusive recruitment – that brought near-term benefits, while also contributing to closing its pay gap in the longer-term.

He went on: “But we are also seeking to change our culture, challenging some of the long-standing beliefs and behaviours about diversity and inclusion. We are at the start of this journey, but… I am confident that we are building the foundations for improved gender balance at senior levels, and for our wider goal of creating an inclusive, authentic environment that respects all forms of diversity.”

Barbican achieved the largest percentage point improvement on its gender pay gap, with the median figure improving by 14 percentage points year-on-year to 34.2 percent. Barbican said it had made several senior hires in 2018 that helped its figures.

The carrier will focus on internal progression, strengthening recruitment, succession planning and improving flexible working to help close the gap further in 2020.

Canopius also improved its gap by 5.6 points to 26 percent, while Beazley improved its gap by 4 points to 32.5 percent.

Beazley wrote in its 2019 report: “Since achieving our target of having three female directors by the 2017 AGM, we have also achieved our goal in May this year of having 33 percent female board members at group level. We have also been focused on our goal of having at least 35 percent [female] senior managers within the organisation by end 2020 and saw this increase to 33 percent in 2019.

“We continue to support our managers and annually review succession plans to assist the ongoing development of women into senior roles, as well as providing training opportunities. The launch of our formal mentoring system earlier this year has meant we have already been able to successfully pair more than 40 women in Beazley with a mentor.”

Canopius reported that of the 26 promotions in this reporting period, 42 percent were women, resulting in a 5 percent increase in female representation in the upper quartile pay bands.

“This remains a continued focus moving forward, and we will continue to encourage women’s progression into more senior positions on a merit basis, particularly into the upper-middle and upper quartile pay bands, where female representation remains at its lowest,” it added.

Pro Insurance recorded the largest deterioration of its gender pay gap, increasing its median gender pay gap by 11 percentage points to 35 percent. Axa XL’s also worsened by 4.1 points to 34.5 percent, and Travelers saw its median gender pay gap grow by 3.7 points to 28.5 percent.

Axa XL noted in its full report: “Although our 2019 results do not demonstrate the progress we want to see, much of the shift was widely anticipated following the integration with the three Axa subsidiaries.

“Excluding data from those subsidiaries to showcase a more like-for-like comparison, the median and mean pay gaps actually narrowed between men and women by 1.6 percent (to 29.9 percent) and 6.4 percent (to 29 percent), respectively, relative to our 2018 reported results.”

When looking at the median bonus gender pay gap, Chaucer had the largest gap at 75.2 percent, some 32.9 points worse than the year before, while Pro Insurance was the only firm to report no gap at all (i.e. a score of 0 percent). As a whole, the average bonus gender pay gap was 37.9 percent for 2019, compared with 43.1 percent in the prior year.

Chaucer noted that the increase in the median bonus gap (42.3 percent in 2018) was attributable to the sale of Chaucer by The Hanover Insurance Group to China Re Corporation Group at the end of 2018, and the payment of all pipeline bonuses (covering 2016, 2017 and 2018) triggered by the sale.

“This positively skewed the median bonus gap for 2019; in a ‘normal’ year (i.e. excluding the trigger and payment of all pipeline bonuses), there would have been a small reduction in the median bonus gap to 41 percent,” it said.

As a group, the 12 brokers that reported their median gender pay gap have made no progress over the past three years. The percentage for 2017 was 36.5 percent on average, moving to 36.1 percent for 2018 and 36.4 percent for 2019.

But there are significant movements within some of those firms. BGL reported the smallest gap for 2019 at 28.9 percent, some 4.7 points worse than the year before and 0.4 points worse than for 2017.

Marsh and Lockton ranked second and third best respectively, with 29.4 percent and 29.7 percent for 2019. This was a marked improvement for Marsh from its 2017 figures – some 11.7 points better than in 2017 and 4 points lower than its 2018 figures.

Marsh’s figures represent Marsh UK, including Marsh Services Limited (which incorporates the UK businesses of Marsh Limited, MMC and Guy Carpenter), and Jelf Insurance Brokers Limited.

At the other end of the scale, JLT Re and JLT Specialty remain the worst performers, with median gender pay percentages of 50.7 percent and 43.2 percent for 2019, respectively. JLT Re recorded a 1.2 point improvement on 2018’s figures, but a 0.2 point deterioration against 2017, while the specialty arm’s result were worse than 2018’s figures (39.1 percent) and 2017’s figures (38.9 percent).

However, JLT noted that its figures were skewed by compensation arrangements related to its acquisition by Marsh & McLennan. “As is usual in such transactions outstanding unvested employee share awards, which would normally have vested over the next several years, were vested and cashed out at the end of March 2019,” its report said.

“As senior employees typically receive a larger proportion of their compensation in share awards, and given the demographic profile of our business, this has resulted in an increase in the bonus pay gap.”

The report went on to note that retention awards given to employees considered critical for the business were also paid in April 2019 following the transaction close, and are therefore included in the hourly pay for the April 2019 report, and generated a one-off increase in the hourly pay gap.

As of 1 April 2019, the companies that formerly made up JLT Group plc were acquired by Marsh & McLennan. On 5 April 2019, the snapshot date for the Gender Pay Gap Information Regulations 2017, the majority of employees were still employed by their legacy JLT employing entities, but they will fall under Marsh UK going forward.

PIB Group had the largest percentage point improvement between 2017 and 2019, lowering its median gender pay gap by 5.8 points to 30 percent.

PIB said in its full report that it was pleased with the improvement but was not complacent. Among the measures it has already put in place are offering apprenticeships with both technical insurance and management pathways; having a female presence on interview panels wherever possible for senior roles; and openly advertising vacancies with flexible working options.

Future plans include allowing flexible working for individuals caring for an adult dependent; further enhancement for paternity pay and shared parental leave; creating an active “alumni” community and keeping in touch with a talent pool of leavers “who we’d like to welcome back to PIB in the future”; and setting up a mentoring and coaching programme for its female talent pipeline.

When looking at the median bonus gender pay gap, brokers on average saw the gap decrease in 2019 year-on-year by 2.2 percentage points to 55.1 percent, although this was 2.2 points worse than 2017’s figures.

JLT Re’s gap of 76.5 percent topped the charts and was some 5.5 points worse than the prior year and 0.4 points greater than for 2017.

Marsh had the second largest gap at 66.5 percent, but this was 4.3 points better than the previous year and 4.9 points better than 2017’s recorded gap.

In its full report, Marsh noted that since reporting figures last year, it had signed the Women in Finance Charter and committed to increasing the number of female senior vice presidents and senior roles by 25 percent by 2023.

A global diversity and inclusion campaign launched in Q3 2019 also saw more toolkits rolled out to managers to help support female careers and continued its global diversity talent programme, launched in 2018 to develop leaders from female, BAME and LGBT backgrounds.

BGL had the smallest median bonus gap of 37.3 percent, 2.8 points better than the prior year but 1.2 points worse than the 2017 figures.

The biggest year-on-year improvement came from Thomas Miller, which saw its median gender bonus gap shrink by 23.5 points to 44.8 percent. The largest year-on-year increase was Miller Insurance, which saw its gap widen 10.4 points to 53.7 percent.

In its full report, Miller Insurance recognised that while it had increased the proportion of females receiving a bonus compared with last year (65.6 percent vs 62.3 percent) the median gap increase suggested “we have more males in the upper quartiles of bonus awards”.

Miller has already introduced 14 measures designed to tackle its gender pay and gender bonus gaps over time, including conducting company-wide unconscious bias training to raise awareness and understanding of biases and how to counter them and launching its Accelerate programme, with 41 participants, which works on meeting the career progression needs of underrepresented groups with an initial focus on gender.

While this year’s figures – albeit truncated by Covid-19 – continue to make for ugly reading, it is widely acknowledged that the gender pay reporting requirements are something of a blunt tool.

One of the biggest issues with the government’s reporting method is that the measures do not distinguish between full-time and part-time workers, which makes a huge difference to results given the larger proportion of female part-time workers.

When the Office for National Statistics calculates the UK’s official pay gap, its breakdown of workers into full-time and part-time cuts the figure in half for the former (8.6 percent in favour of men) and reveals a pay gap in favour of women for the latter (-4.4 percent).

In addition, the required calculations do not take any like-for-like comparisons into account on measures such as age, background, experience, education and degree level. Even the type of job is not considered.

Therefore, if the UK government genuinely wants the reporting of gender pay gaps to lead to real change, it must update the reporting methods to take it beyond an overly-simplistic box-ticking exercise and turn it into something with meaningful data.

This would lead to far greater transparency on where we as an industry are falling down on gender equality, which is often less about pay and more about opportunity.

This article was first published on the Insurance Insider website on 3 June 2020