Transparency, accountability, and inclusion: driving change in the insurance sector
The insurance sector has reached a pivotal moment where transparency, accountability, and diversity, equity, and inclusion (DEI) intersect to shape its future. This has manifested itself through Executive Boards making DEI a strategic objective though this is still not yet a universal adoption. New regulations have increased transparency: pay gaps, governance, board diversity, and executive diversity must all now be reported.
So insurance organisations have an opportunity to use this momentum to foster meaningful change. With the acute focus on consumer conduct, expectations from customers and regulators is that insurers conduct their business in such a way that promotes DEI and eradicates discriminatory practices.
A joint PA and DiversityQ roundtable event held in Spring of 2023 brought together insurance industry leaders and experts to address the critical areas of diversity, equity, and inclusion (DEI). During the event, we asked how organisations can make sure the commitment to diversity is more than superficial or a compliance exercise, and we noted there was a particular focus on the power of transparency. But we recognised the sector wasn’t making the most of advances in data science to track and monitor the progress it’s making with diversity.
It’s important that the sector steps into measuring its progress to move into a more diverse, equitable and inclusive future. So, what exactly should insurance firms be measuring and how can they rise to this task to accelerate DEI? The panel agreed that to effectively accelerate the impact of DEI, insurance firms must recognise the importance of measuring progress, and they must adopt a comprehensive approach to ensure meaningful and sustained change.
Set benchmarks and track progress
Leaders are uninspired by diversity statistics on company boards and executive committees that show mere legal compliance. Data on the demographic mix of colleagues, the number of grievances raised and feedback from employee surveys can tell us there is a problem, but it’s difficult to know what to prioritise. To measure progress, the panel recommended that insurance firms should set clear benchmarks, agree on realistic targets, and regularly monitor the success of diversity initiatives. It can be helpful to gather people diversity data from workplace systems and map it to the key parts of the employee lifecycle: recruitment and onboarding; work allocation, performance, progression and leavers.
Advances in data science means that we can now structure data to show leaders how they can establish genuine transformation. This is done by linking shifts in these diversity metrics to business outcomes, such as innovation, decision-making effectiveness, engagement and productivity.
By using data-driven insights, organisations can identify gaps, measure the impact of their actions, and make informed decisions to change tact if required. With the right reporting tools, enabled by new advances in data science, and a commitment to transparency, insurance professionals can navigate the complex landscape of DEI and drive sustained change.
Link diversity metrics to executive pay
Another tactic to ensure diversity isn’t just lip service lies in linking executive pay to DEI goals. Connecting financial incentives to diversity outcomes is a game-changer. It motivates leaders to actively champion and support initiatives that allow everybody to bring their best selves to work. It introduces accountability and creates a link between individual success and the success of diverse talent within the organisation.
Organisational culture is built through what leaders say and do consistently, and when leaders in the insurance sector understand that their actions matter and are reportable, they will know what they need to lead and will start to have the important conversations to learn how to inspire and deliver progress. This shapes a workforce that is representative, engaged, and driven to deliver results. Everyone wins and an inclusive insurance industry is structured for sustainable growth.
Embrace reporting and partnerships
Regulators play a crucial role in fostering a diverse and inclusive insurance sector. Setting clear guidelines and targets, they guide organisations towards meaningful progress in areas such as representation, the creation of an inclusive culture, and a more engaged and productive workplace. The Consumer Duty is an opportunity for the insurance sector. The duty emphasises the importance of treating all customers fairly, including vulnerable individuals. It guides firms into making sure that products and services are accessible and transparent. Everyone wins, because by making sure that these objectives are met, insurance firms critically evaluate their practices, policies, and customer interactions. When you work to eliminate biases, customers and the business benefits. Embracing the Consumer Duty means that the insurance sector builds a culture of inclusivity, trust and fairness.
Insurers should use external reporting frameworks and standards, such as those developed by industry associations and regulatory bodies. It can feel daunting voluntarily sharing diversity data and reports that show limited progress. But organisations that do this demonstrate an appetite to learn and improve. They also pick up valuable insights from industry peers that they can build into a published action plan. A published action plan, the likes of which is already used in the legal sector and shared with the Solicitors Regulation Authority, show colleagues that you’re not just gathering the data because it’s a requirement. Instead, it allows organisations to build out sector-wide reporting, data analysis and diversity research on what positively impacts business outcomes.
Build a communication and engagement plan
It’s important there are two-way channels for feedback and engagement to maintain transparency and accountability. Build a change network to make diversity and inclusion initiatives actionable. Participants help to amplify the ‘employee voice’ and help embed diversity and inclusion initiatives at all levels. Focus groups, regular surveys, corridor conversations, water cooler chats and town halls give people the opportunity to share their personal experiences and ideas for improvement. This fosters trust and makes sure that the organisation’s efforts align to the hopes and needs of all employees. Change networks serve as ambassadors of change, playing a critical role in actively championing diversity and inclusion initiatives, promoting awareness and engaging colleagues in conversations.
It’s within our collective power to create an insurance sector that truly reflects the needs and aspirations of the diverse communities we serve. This will build an industry that not only protects against risk but also nurtures talent, fosters innovation, and paves the way for a more inclusive future. With this focus, we can unlock ingenuity and accelerate growth, leaving a legacy that transforms the insurance industry for generations to come.