Making London more diverse

In attendance:
Joanna Browning, human resources director–national markets, Markel
Lynsey Cross, CEO, ANV
Ashley Hunter, managing director, Touriga Risk
Heidi McCormack, chief executive, Emerald Life
James Mee, co-chair Link, the LGBT insurance network, RPC
Ben Reid, chief executive officer, London Market Group
Robert Reid, diversity champion, Insurance Institute of London
Peter Staddon, managing director, Managing General Agents’ Association

Chair: Marc Jones, deputy editor, Intelligent Insurer

The issue of diversity is increasingly relevant yet a poll carried out by Lloyd’s in April 2016 indicated only around 25 percent of London Market companies have diversity and inclusion (D&I) policies in place. How are companies in the London Market responding?

Joanna Browning: I have noticed a really significant change in the markets, certainly in the last three to four years, and it’s become much more a topic of interest internally. That changed for us because our chief operating officer (COO) decided for himself that he wanted to be our diversity champion. We now see that as being intrinsic to everything that we do—there is a real appetite to do things that are more than just token gestures.

James Mee: While I can speak only from my own experience, the current focus on D&I within Lloyd’s itself, market participants and the wider insurance market, is much more developed than it was even a few years ago. Although some are ahead of their counterparts, most of the smaller organisations may be lagging behind the larger ones in developing and implementing their D&I thinking, as resources are always going to be a factor. That said, there are some easy wins that all organisations might think about. It's important that we keep this positive momentum going.

Peter Staddon: Lloyd’s has a lot of old men in grey suits. To try to get Lloyd’s to move is a seismic change. But they’re getting there! Inga Beale (CEO of Lloyd’s) for example has come in. I came to the market in 1971 and you never saw other than white men in there. Now it’s completely different and it’s quite encouraging.

Lynsey Cross: A lot needs to change but I would agree with you that it’s certainly very different from 10 years ago. I delivered a presentation to the Next Generation Insurance Network recently about how to attract millennials to the insurance industry and how retain them. As part of that we did a survey and the topic of nepotism came up again and again in terms of the need to change recruitment practices. We’re never going to solve this issue unless we recruit from different talent groups than we have in the past.

Making sure we are seen in the right places, promoting the industry and what it has to offer is a really proactive way we can change the younger generation coming through. It takes effort but you need to if you want to change things.

Ben Reid: A key part of the London Market Group’s agenda is doing market education to help us to recruit in new places. No-one is out there talking about the great virtues of working in the London insurance market. We should be looking not just at the universities or schools we have traditional connections with—we should be going much more widely.

Cross: A PwC survey said less than 1 percent of millennials wanted to work in insurance compared to 15 percent who wanted to work in banking or 20 percent in professional services. But we can actually offer a whole diverse range of different careers, not just underwriting. People don’t know about us, because—as I said—we’re not promoting ourselves; I went to a careers fair recently with my son and while banking and professional services were well represented there was no-one from our industry—we need to target the groups we are trying to attract and market what our industry has to offer.

Robert Reid: Most people fell into this industry by accident and not by design and that is part of the problem. The Chartered Insurance Institute (CII) has done some work with Discover Risk which is the board game on the financial services side to engage people with the kind of things that they can get involved with and appreciate the impact the industry has on different areas.

You need to get people to see it as a career. It’s also about getting some of the COOs to recognise that we have an increasingly diverse marketplace that we’re trying to attract.
Things have changed in a relatively short period of time but diversity is something that you have to work towards. I have personal reticence towards quotas. I don’t think they take things forward.

The problem is diversity has been too heavily focused only on gender in a lot of cases and hasn’t picked up things like mental health issues, or lack of education—they are just as important. Ultimately if you restrict yourself to one thing, a lot of people will switch off.

Browning: Recruitment really is key—we fish from such a small pool because we’ve always relied on agencies. We’ve got to be prepared to be more proactive, fish from a much broader pool, and see recruitment differently. Our apprentice scheme now has a really nice mix of ethnic backgrounds, educational backgrounds, gender backgrounds, and that’s been a big shift for us in building the early careers.

Cross: I agree. Also you’ve got to make sure that the people who are interviewing and recruiting for your firm are on board with the need for change if you want to make that change happen. If promoting diversity isn’t an active part of your recruitment process there can be a degree of unconscious bias because a lot of people recruit in their own mould. It’s a natural thing.

How does having a diverse team help your bottom line?

Heidi McCormack: It’s a really important point that not having a diversity of staff impacts the scope of what groups you can market to. In a previous incarnation I was working with General Motors in Russia. Russia’s not a particularly progressive country but for women’s employment it’s unusually progressive.

One of the advocacy things we did with the American Chamber of Commerce was explaining that with diversity you will be able to market to more parts of the marketplace if you know what their issues are, product requirements, their likes and dislikes. Otherwise it affects your bottom line and you’re missing out.

Mee: We know that diverse teams boost both the top and the bottom lines. Research tells us not only are employees happier to work as part of a diverse team but that there’s a lot to be said for the ability to market to new customers with a broad, diverse and outward-facing team. Companies shouldn't approach D&I as a box-ticking exercise, or just see it as a fad—the steps one takes should run right through the business and everything one does. The benefits of having a diverse team are paramount to the success of the business.

Ashley Hunter: From my perspective—I’ve founded an insurance start-up—I am not surprised that things have not changed nearly as quickly as one would think. But the UK is leaps and bounds ahead of where the US is as far as diversity is concerned in the insurance industry. It was easier to get funding for my business or paper for my business in the Lloyd’s market than it was in the US market. I’m encouraged that the London Market—from my own personal experience—is moving in a direction that is more positive and more favourable to women and people of colour.

Ben Reid: The market is very good at beating itself up. To some extent that becomes a self-fulfilling prophecy when you’re looking to recruit if we talk all the time about how terrible we are. There are some really good positives, such as there are 500 people in the Link network—that’s a real plus.

Browning: You have to get the right pace of change for your market and for your company—we haven’t even looked at interest groups internally yet, because there’s been no interest from staff. Until I start to hear chatter about whether it would be possible to do this and that, that’s something I don’t think we are ready for.

Cross: Partnering with organisations like Link is a great way of opening up the conversation about diversity internally. Sometimes we don’t hear the chatter because people are intentionally keeping things quiet, so we’re not managing to ask the right questions. I didn’t realise there were 500 members of the Link group—I’ve written myself a note to investigate marketing ANV and the opportunities we have to members of Link. The network is an untapped talent source for us at the moment.

Mee: We see Link as an opportunity for people to network for business reasons, as well as for personal and support reasons. Many organisations aren’t large enough to have a sizeable LGBT community to have a network of their own, so we've deliberately set up a cross-market group to provide that network. A number of members have had job offers as a result of people they meet and business connections have been made—it’s good to hear such stories. I’d like to think the London Market is open to these concepts. Link is always going to have that LGBT focus, but we don’t want it to be an LGBT-only organisation. To succeed, Link has to be very inclusive.

Robert Reid: That’s important because I think something has gone wrong in some of the gender-orientated groups—the number of different organisations is just frightening. There’s too many of them and you’ve almost diluted the impact, because you get so many different groups, all doing very similar things, so you don’t get the element of leverage you would have otherwise to carry the whole thing through.

Another area we are very keen on is the mentoring side, in the past it was always done by older people mentoring younger ones. But as you get older you realise that the chance of your understanding what someone many years younger really thinks is unlikely.

Cross: Having role models and mentors is so important. I think that if you’ve reached a senior position yourself you have a responsibility to help people at a different stage in their careers achieve and progress. Mentoring works both ways. I have regular lunches with groups of young people within ANV and I’ve learned so much from hearing about what they think makes an organisation successful and what doesn’t.

Robert Reid: The challenge when you’re offering product out to the marketplace is to have something that is very relevant to people. The other challenge I worry about is that the smaller firms can’t do the mentoring as easily—is there a way to create groups within the smaller firms so that everybody helps each other? Otherwise they wouldn’t have the same level of exposure that would let them get the diversity in place.

Cross: Sometimes you want mentors from outside of the conversations as well. It’s better if you partner up with other organisations to do that.

Mee: From a mentoring perspective, we can join up those conversations—LGBT or non-LGBT—under a banner. We are considering this through Link at the moment.

Hunter: What’s really helped us as a smaller organisation is that my mentors are senior executive women in larger organisations. I came from a large insurer before I started this venture, and it has been very helpful, because I’ve been able to reconnect with resources I lost by starting my own firm. Also my mentors are able to say “we’re helping the small guy”.

The problem comes when you’ve got so high up you end up in a bubble and then you realise you should probably venture out and talk to people, and stop talking only to other executives.

Staddon: Your point is very important because if you are in a big firm, the mentoring follows down. I do a bit of work with the Insurance Institute of London and the CII on the mentoring front.

McCormack: At General Motors, where I was for many years, part of everyone’s KPIs was diversity inclusion, and all sorts of things which didn’t have to do with P&Ls, but were part of your responsibility as a manager. Your bonus was reduced if you didn’t perform as much on the ‘soft’ side as you did on the P&L side.

If you look at the London Market—it is predominantly white and heterosexual, even with the Lloyd’s campaigns. The question is how do you recruit and how do you put messages back into the market to overcome that.

Robert Reid: The industry hasn’t moved forward. Insurance very rarely sells itself as a positive benefit to people. I don’t think general insurance has fully engaged with behavioural science as yet. What actually drives people to do things? The investment side has heavily investigated what triggers people to take action.

What changes do you see in how companies operate?

Browning: Within our market there are specific issues around working practices. Normal insurance office hours in The Room can be such a drawback—five days a week, ten ‘til four, whether you’re male, female or whatever background. General working practices are becoming so much more flexible and we’re just not geared to that. There might be huge diversity behind the scenes, but you’re never going to change front line underwriting until you can look at the working practices within Lloyd’s. That really bothers me—the attrition on front line underwriting. So many women leave to set up their own businesses or to find some other way of working.

Cross: There’s been such a rise of the ‘mum-trepreneur’, because it’s been too difficult to stay in the industry. We’re losing so many really talented women from the industry because the lack of flexibility makes it too hard for them to come back

Staddon: This morning I was seeing a new MGA. They’re a small business, £3.5 million turnover, eight staff, five of them women. All the women are underwriting—their assistants are men. Things are changing—but not yet in The Room.

Robert Reid: The nine to five issue is really important. I’m in the middle of recruiting and I’ve been talking to a variety of people. One of my challenges is to get across that I don’t mind when people work on the some of the tasks we have to do—I just need it done in a certain window of time. If you deliver a task at 11pm because it suits your lifestyle, I don’t care, I simply want it done. The challenge then is how you restructure management controls because if you’ve got people working in that manner, how can you control that effectively.

Ben Reid: A key change is electronic trading, which will launch in July, starting in a small class of business, terrorism, but with a plan to roll out over the next two years into every class. That’s got to have an effect on disrupting the ways that people work and what they do—less administration and more value added. It’s never going to get rid of face-to-face trading, that’s not the intention, but it’ll certainly allow people to work more flexibly.

Hunter: We’re insuring the disruptive economy so most of the time technology companies don’t have set hours—you may end up with a submission at 10pm coming from the US, or wherever. I’ve never stipulated working hours, it’s just whatever it takes to get it done and to underwrite the risk. You have to do that because millennials don’t want to work like we used to.

Cross: I agree about the millennials—if you can’t offer flexibility then you get left behind. The point is about recognising the whole person. Everyone has a life outside work no matter what ‘group’ they fit into. If you can recognise that and create an environment where work ethic and getting things done is more important than the time of day they are done, you’re going to build loyalty and retain people within an organisation.

Hunter: The insurance industry is much more reactive than proactive. It was very difficult to find anyone willing to partner with me when I was starting the firm. I told people I wanted to insure the disruptive industry and it sounded great on paper, in theory, but everyone I talked to was hesitant.

A black woman from America who used to underwrite Islamic insurance—it was like check, check, check down a list and then they were falling over themselves to partner with me. I think that London is changing, but it’s slow.

Ben Reid: Your point, Ashley, is really important, because one of the titles of this roundtable is ‘moving London on’. We’ve talked a lot about diversity and inclusion from the perspective of employment, but actually we should also look at the perspective of the insurance buyer. The insurance buyer is changing as well and we need to respond to that in equal measure.

Hunter: Yes, the buyer is different. More women are starting businesses, more people are starting technology businesses, fewer people own their property—they’re sharing, even retirees. The world has truly become smaller and we’re just a community.

Robert Reid: There’s less in the way of benefits such as private medical cover. I wonder whether insurers realise that they need to start diversifying products. The tradition in the industry has been ‘here’s a product, do you think we can find anyone to sell it to?’, as opposed to trying to look at what people’s real needs are and then working backwards.
They got away with it for a long time but we’re now at that tipping point where it’s just not going to work. People are not going to buy something that they don’t really want.

Does the regulator have a role?

McCormack: A point about regulation that’s interesting to me because America doesn’t have anything like it is the whole TCF (treating customers fairly). When I first saw it I went ‘What? This is so touchy-feely’. A lot of the items are soft, but it’s clear about what’s acceptable. But if the Financial Conduct Authority (FCA) feels comfortable enough to go into TCF, why wouldn’t they go into D&I policies, at least as a start?

And if that’s going to tick the box, hopefully they’ll look at mission statements. If you forced companies to have a diversity statement, are they expected to live by it? Probably not, but the exercise is forcing companies who haven’t even thought about it to go through it.

Browning: There is the diversity charter; that was a fantastic first move from Lloyd’s because it started to open doors, and if we can encourage the regulators to take it seriously in the way that Lloyd’s has, there’ll be huge progress.

Is this a case of the market driving the regulators or are the regulators driving the market?

Mee: One way to look at this is that it is interesting that the regulators are talking about culture—boards are going to have to address that issue and work out what the culture of their organisation is. It is important that organisations achieve a consistent culture from the top to the bottom and that D&I plays a big part in that. The regulators aren’t dictating what the right type of culture is but organisations should have the culture which delivers the outcomes that are important.

Cross: Having a mission statement and values that are printed on the wall is very different from actually living them and making sure that they permeate through the whole organisation.

Robert Reid: If you look at most firms they’ve got no culture at all. They’re paid purely on the money that the management drives in. New EU regulations on investments which will kick in in the next few years (whether the UK is in or out doesn’t matter because they all play in the European market) mean that they will have to work out if they’re selling to the right kind of people.

That’s a big change in thought patterns for these people and I’m not sure that some of them are capable of making that jump. TCF has been a big challenge, because if you’re looking at a piece of advice and whether it is compliant, the drivers might not be purely numerical or financial.

McCormack: We’ve just dealt with Lloyd’s as a coverholder and with the FCA for some other issues—it was chalk and cheese. Lloyd’s was absolutely super-helpful. Great website, super-functional, you picked up the phone and you got your questions answered. Their mission is to support us in the insurance sector. At the FCA, we were referred to different places, called a number, had our case number and other details, and it took us a while to get answers. Very different organisations from a SME standpoint.

Hunter: I agree. Lloyd’s was amazing, super-easy to talk to. Everyone in the department in terms of getting the coverholder situated was easy to talk to—it was painless. The FCA on the other hand—I would absolutely agree with Heidi. You have to work with someone who works with the FCA all the time, or your application falls into a big black hole.

Browning: There has been a big change in the mentality of Lloyd’s. The new HR director was very clear when she came in that 50 percent of her time was to make Lloyd’s better and 50 percent was to make the market better. I really like that.

McCormack: As someone with recent experience of that institution it really does show.

Robert Reid: It should be the same with the regulators. The difficulty I have is that at the moment 35 percent of my turnover goes on compliance. That’s a lot of money. I have friends in the US who pay as little as 5 percent.

Changes are starting to come through and regulations are tightening up around the world, but we all need to take part in the debate and there’s a reticence among some of the bigger organisations to respond. They’ll wait to see what comes through—and then it’s too late. You need to get in as early as you can and start to influence things.

Lloyd’s has evolved tremendously, as have a lot of professional bodies—but the regulators haven’t.

Staddon: We’re starting to challenge the regulators. We’re asking what’s going down the line of predetermined premium (PRED). Will they gold plate it? If they won’t gold plate it, are they saying that the London Market is no good? The integrity of the market in the UK is in question. We’ve been chasing them for the past 18 months. I’ve spent time educating the FCA on what a managing general agent is. It isn’t a broker, it’s completely different. And that’s the problem.

Any other points you would like to raise?

Staddon: When we talk about diversity and young people, who is holding the purse strings for insurers at the moment? There’s a lot of new underwriting capital coming into the market from new directions. In five years’ time will we see that the traditional insurers have a problem because new entrepreneurial entrants have come in? That could be quite exciting.

Browning: I’ve seen more creative people enter in the last few years than I have in the past 10 years in insurance. We’re bringing in people from outside the market, and that’s helping with more ideas, so I am quite encouraged. I see green shoots of growth all around. We have one senior underwriting team led by a woman where two men work on a part-time basis. That’s an accepted part of the culture of that team and that’s becoming more common.

McCormack: The arrival of the millennials into the market will be a seismic shift. Their lifestyles are different and they are looking primarily for jobs and not careers—to their detriment. Millennials have a very different outlook—more flexible, more diverse. The traditional nine-to-five job in The Room is over, that won’t be usual working practice. The market’s going to change and needs to change.