Of the top fifteen insurance companies in Canada, only 33% of CEOs are women.
This statistic reflects a startling trend in the insurance industry. At over one-hundred-and-fifty-years-old, insurance in Canada is a traditionally male-dominated industry, known more for legacy than diversity and inclusion.
However, research on gender equality in the financial services demonstrates a strong correlation between diversity and innovation.
With the influx of new technologies triggering the fourth industrial revolution, the insurance industry needs to embrace change and automation to keep up with the rest of the world.
Without a concentrated effort to diversify its leadership, the insurance industry risks falling behind.
Gender Inequality Impacts Business Performance
Research on gender parity in the financial services industries within North America suggests that lack of diversity on executive teams results in lower profitability, net income, and long-term value creation when compared to organizations with a more diverse makeup.
In their study of diversity and financial performance, McKinsey & Company found that organizations with diverse leadership teams outperformed their non-diverse counterparts by 21% and were 27% more likely to demonstrate superior value creation in the long-term. An increase in performance can be attributed to the innovation that results from idea-sharing environments comprised of contributors from a variety of backgrounds.
These results align with the findings from a 2019 study conducted by the Harvard Business Review, which monitored performance after organizations added more women to their leadership teams. The result was increased financial success. The significance of these findings are best captured by a quote from the National Leader of People & Organization at PwC, Jean McClellan. When referring to the results of the PwC Annual Women in Work survey, she stated:
“There’s mounting evidence to suggest a diverse workforce leads to more innovation and stronger financial results. Creating an environment where women thrive makes good business sense.”
The Cycle of Underrepresentation and Deselection
Considering the positive results a diverse leadership team has on organizational profit and performance, one may question why companies in the financial services industries, such as insurance, don’t just hire more women.
The answer requires an analysis of the current state of gender parity in the insurance industry. In the P&C sector, females fill 62% of roles at the entry-level. However, as the roles progress, the rate of women filling these positions declines from 50% at the management level to 18% at the executive level and only 4% at the C-Suite level (Insurance Business Magazine, 2019).
The reason for this decline is multi-faceted. A study conducted by PWC identified the top three factors men and women consider when determining whether or not an employment opportunity is attractive: career progression, pay, flexible work-life-balance. While the factors were the same, according to the study, women place more priority on work-life-balance than men.
However, the stigma concerning women’s commitment to their career and their responsibility to their family is still present in today’s culture, and the feeling that prioritizing work-life-balance will hinder their professional advancement is all too real. For some women, career progression is not worth the cost.
When it comes to career progression, compared to men in the industry, women are 76% as likely to be promoted to a role in management, and only 64% as likely to be considered for a VP role (McKinsey & Company, 2019). According to Deanna Strable, EVP and CEO of Principal,
“The lack of women in C-suite positions is a self-perpetuating cycle. Because we don’t have many females in C-suite, young women don’t see role models or potential paths towards executive-level leadership and are more likely to deselect themselves out of higher-level leadership roles.”
Mentorship and Professional Development are Critical for Career Progression
In McKinsey & Company’s survey on Women in the Workplace, mentorship was cited as the most critical contributor to success (2019). Women who have received advice from leaders are more likely to achieve promotions and are better able to navigate career progression. However, the results from the same study suggest that men are more likely to have managers who advocate on their behalf.
Furthermore, women may not recognize the importance of these early-stage professional relationships and, in the practice of role modeling, are more likely to seek mentorship from other females. However, as women climb the ladder, the pool of mentors narrows, and the number of female role models diminishes.
To combat this cycle, some organizations offer ’in-house’ mentorship programs, such as mentoring ADVANTAGE, a program run by the Insurance Institute of Canada that offers formal sponsorship programs, to support employees and demonstrate their commitment to creating an inclusive and diverse culture.
Professional development services may help break the cycle, such as skills and resource training, career coaching programs, and company-wide communications regarding internal promotions. Multiple insurance companies, such as The Traveler’s Group, Intact, the RSA Group, and AIG, support their female employees by offering guidance services, leadership programs, and career mapping. By providing a practical exercise that helps female employees identify actionable steps they can take to advance in their careers, these companies are communicating and reinforcing the value of their contributions.
Another leader in the insurance industry, Lloyd’s of London, is addressing the issue of gender inequality head-on with initiatives such as Inclusion@Lloyd’s, a “governing body comprised of senior executives,” tasked with, “supporting industry-wide initiatives that create impact and lead to action.” One such initiative is an employee resource group, Lloyd’s Inclusion Inspire, which is committed to creating an “open, inclusive, and supportive environment where colleagues can connect and share on gender equality within Lloyd’s. The activities undertaken by the group include promoting awareness around issues regarding gender equality around the office and addressing critical topics in an open forum.
An Inclusive Workplace Goes Beyond Bias Training
It begins at the top with leaders viewing and publically committing to gender equality as a strategic priority, which sends the signal that they are committed to diversity. A Glassdoor study surveying 1,000 individuals across North America shows that 67% of candidates consider the diversity of a company when considering an offer, and 61% of female surveyed consider the diversity of the leadership team before accepting a new position (Harvard Business Review, 2019).
Those who are unable to keep up risk losing talent to companies with diverse makeup, which may negatively affect their performance and value creation. Companies such as the Economical Group and AIG publish an annual public accountability statement, which outlines their goals and progress for creating a diverse and inclusive work environment. This open form of commitment and transparency allows organizations to attract and retain a diverse portfolio of talent that will lend itself to innovation throughout the company.
A traditionally male-dominated industry, talent recruiters are changing the way they approach attracting talent in today’s shifting landscape, especially when it comes to women.
“Due to the lack of diversity in the industry, it’s hard for women to see themselves in insurance, especially in leadership roles,” says Javiera Ibacache, Recruiter at Zensurance. “We want women to know insurance is a viable option, where they can grow professionally and expand their skill set.” With partnerships at several colleges across Southern Ontario, including Centennial, Humber, and Seneca, Zensurance is making it a priority to introduce young women to insurance as a career path.
“Through our partnerships, we have attended Women in Insurance events and hosted workshops on career progression in the Insurance Management programs. From a talent perspective, we hope our presence at these schools will keep Zensurance top-of-mind for young professionals post-graduation.”
The Insurance Industry Must Diversify to Remain Relevant
Research shows diversity leads to more value and net income. As a result, we in the insurance industry must diversify to stay relevant, but changing the industry won’t happen overnight.
Gender equality is a long term game with longer-term gain and requires concentrated effort from those at every level of the organization, beginning with leadership. External validation, open dialogue, and organizational commitment are vital to the career progression of women.
Beyond gender equality being a social issue, from a business perspective, the insurance industry must adapt and innovate for the problems of tomorrow.
At Zensurance, we are leading the technology revolution in the insurance industry, and demystifying insurance for start-ups and small businesses by using data and analytics to identify common risks and create curated insurance packages suited for each industry.
We understand trust is paramount to our success, and it is our responsibility to embrace diversity and respect one another and their rights. Despite being an InsurTech company that employs process automation to reduce inefficiencies in the value chain, at the end of the day, we wouldn’t be able to do what we do without our strong group of people.
This is why we are committed to continually finding ways to create a safe and inclusive space for everybody to contribute, grow, and succeed regardless of their background or gender.