Diversity in London?

“If COVID-19 has taught us one thing, it’s not to underestimate the power of disruption,” says Nick Cook, CEO of BMS Group.

He’s talking about the inspiration, compassion and innovation that have arisen from the pandemic. But he’s also talking about London’s insurance market and what may come of its new embrace of diversity and inclusion. “It’s critical for leaders to build workforces which are reflective of the society we live in and the market in which we operate,” Cook says. “Diversity in all its facets will challenge a narrow focus or status quo into a new world of curiosity, agility and innovation.”

London’s risk market has received plenty of attention over D&I issues during the past two years but almost all of it the wrong kind. There’s no denying that for decades (centuries, even) the London market had been a clubby agglomeration of middle-aged white British men. In that, the insurance sector was no different from any of the city’s other world-leading financial markets. The distinction lies in its very late realization that an extreme lack of diversity is not just unacceptable but also a dramatic business disadvantage.

That was then. Now, better late than never, London has at last cottoned on to the fact that D&I is a goal to be pursued not just because it’s the right thing to do but also because it will deliver tangible business benefits. Executives across the market now sing from hymn sheets with lyrics much the same as Cook’s words. To embrace D&I may be to stave off unpleasant disruption for the entirety of the sector.

Trigger Points

People place the epiphany at various times, depending upon their perspective. Sheila Cameron, chief executive of the Lloyd’s Market Association, traces it to the height of the MeToo movement, with the publication of a damning Bloomberg article about gender discrimination and sexual harassment at Lloyd’s and a subsequent “culture survey’ of Lloyd’s passholders by the market’s central authorities. Needless to say, the finding that 8% of respondents had witnessed sexual harassment during the previous year shamed the market. Even the notoriously traditional bankers were shocked.

“The article and the survey really changed things,” Cameron says. “They moved the conversational dial.” In a market driven by data and numbers, the findings transformed the symptoms of London’s discriminatory malaise “from hearsay to solid evidence that the market had an issue that it had to deal with,” she reports. “It was a wake-up call.”

In contrast, Junior Garba places the trigger of major change more recently. He’s an underwriter at the Lloyd’s operation Tokio Marine Kiln and co-founder of London’s Afro-Caribbean Insurance Network (its own inclusivity now extended to all the London market’s black, Asian, and ethnic minority workers). He saw real change occur at the peak of the Black Lives Matter movement, following the death of George Floyd. “Especially over the past six months, D&I has taken a position in the mainstream,” Garba says. “Since then we have seen a real shift in the market’s attitudes towards D&I.”

The trigger came earlier for Susan Downey, head of human resources at the London brokerage Miller. “The death of George Floyd last year and the BLM protests elevated market discussions around race and ethnicity and promoted discussions here about supporting our employees and promoting better diversity,” she says. However, Downey places the starting point in 2017, when the U.K. government first required companies to determine and publish details of their internal pay differentials between men and women. “The implementation of required pay-gap reporting was not a perfect intervention, but it prompted employers to look at the reasons for pay differentials, which are driven largely by a lack of diversity at the senior executive level,” Downey explains.

Diverse Diversity

As differing identifications of the key trigger of change show, diversity itself is diverse. Gender was the clear recent starting point, but ethnicity, age and even employment background have all been barriers to market entry. Now they and other barriers are falling.

“We are seeing people looking outside insurance to bring new talent in,” Cameron says. “Lloyd’s has hired a chief digital officer from the banking industry and chief marketing and communications officer from the Stock Exchange. Yesterday I spoke to someone from a managing agency hiring a head of digital from a newspaper.”

Heather Clarkson, divisional CEO for specialty at Ed Broking, says broad D&I adds business value in part by granting access to a far more extensive talent pool than old hiring practices allowed. “After a successful work-experience program, we made a lot of GCSE [general certificate of secondary education] and A-level hires [ages 16 to 18], looking to open our industry up to a whole age group that might not have been aware of insurance as a career prospect,” she explains. “This gave us an interesting advantage during lockdown. Having teenagers well-versed and confident with technology meant, for the most part, they adapted to working remotely far quicker than their more established colleagues—and this helped their wider team to achieve business as usual.”

Diversity doesn’t stop there. “Another example of thinking differently when we hire is considering neurodiversity,” Clarkson says. “It involves recognizing the unique advantages and valuable skills neurodiverse people bring, particularly when considering very analytical roles such as actuaries and cat modelers.” According to Psychology Today, “neurodiversity is the idea that variation in brain function exists across the population.”

In an interview with Leader’s Edge for an upcoming article on neurodiversity, chief people officer at OneDigital, Elizabeth Chrane, says, “Very often, the experiences of those with learning disabilities have forced them to become very resourceful in other ways. They can be very creative problem-solvers. They can also be great solution-oriented thinkers because they probably faced a lack of understanding or support from others and have had to seek their own ways to solve for any given challenge.”

Top-Down Change

Such broadened horizons are a function of the widespread realization that almost anyone could contribute to the London market’s secret sauce and that excluding any potential employee based on their fundamental characteristics disadvantages the business and the market. Such mindset shifts are critically important at the top, where decisions are made and cultures promulgated—but that’s where the white middle-aged British man syndrome remains most firmly entrenched.

“It is vital to have leadership who are committed to D&I,” Clarkson says, “and a human resources team that supports the work that goes into achieving these initiatives, challenging the decision-makers in the business to put them into practice and to think differently when they hire.”

Despite the incumbents, boardroom attitudes have changed over the past two years, according to Dax Gulmohamed, chief underwriting officer at Axis Specialty Europe. “D&I has now become a mainstay of board and executive discussions,” he says. “It is very much front of mind for companies as they think about training and development, recruitment and working practices.”

Progress is being made on improved gender balance among senior executives and board directors in the London market, though there’s more work to do. “Some of the initiatives Lloyd’s has championed in this area have seen strong support and commitment from the market,” he says, “and will continue to accelerate progress in this area.”

Lloyd’s central work to drive D&I among market underwriting firms has been high profile and comprehensive and now includes the creation of quotas. “We wholeheartedly support Lloyd’s target of 35% of leadership positions held by females,” up from the current 29%, says the LMA’s Cameron, “and in October the Council of Lloyd’s agreed on a target of 33% of the Council of Lloyd’s membership to be made up of females and/or members of ethnic minorities.” It is highly unlikely any such target would have been acceptable to the market five years ago, she says. “We have moved on substantially.”

According to Lloyd’s “Culture Dashboard 2020,” market firms’ boards are 67% male, their executive committees 78% male, and direct reports to the executive committees 64% male. Seven firms have all-male boards and executive committees. The market is clearly top-heavy with men: from unskilled staff on up, its overall gender split is 55% male and 40% female, with 5% of firms preferring not to divulge their gender division. On ethnicity, a staggering 36% of firms preferred not to reveal the numbers, but of those that did, 87.5% of personnel are white, 6.25% Asian, 1.6% each of black and mixed race, and 3.1% of another ethnicity.

“I have witnessed as much progress in the past two years as in the previous 15,” Cameron says. “Lloyd’s has taken positive action and is demanding these targets are met by managing agents. New entrants have to meet them from Day 1.”

Meanwhile, the market’s underwriters and brokers are becoming more open to hiring talent from non-traditional channels. “That’s turning on its head the ways we approach, for example, change programs in Lloyd’s,” Cameron says. “We’re bringing different people with different experiences to the table.” Yet Cameron concedes there’s still a way to go at the very senior level, with only two female chief executives among 52 managing agents.

Inclusion Is Key

“Bringing different people to the table is vital,” BMS chief Cook says, “but then it’s equally important to give them a voice.” Never has a culture of inclusion been more critical in the attraction of diverse talent pools than during the current period of uncertainty, he says. “There needs to be commitment to creating an environment where everyone feels valued, supported and included. If we do not do this, employees are naturally drawn towards people like themselves, are resistant to new initiatives and change, or feel the need to adjust parts of their identity to conform.” That, he says, reduces collaboration, innovation and agility within businesses, which in the long run will have “profound negative effects on reputation and productivity.”

Similarly, Ed’s Clarkson says, “It is certainly one thing to talk about diversity, but it is another thing to make it real without also truly achieving inclusion.” It’s not simply about paying lip service by hiring people from differing backgrounds, she says, “but also about investing in these hires and making the workplace environment one where they can develop and grow within the company.” This could include, for example, making the workplace easily accessible for the physically handicapped.

Sabrina Kruse, the regional head of HR at the reinsurer Scor, points out that organizational cultures usually aim to promote inclusion by setting out behaviors and social norms that make people want to belong, but she says the London market may be different. “In insurance, these cultures are too often drawn from a narrow spectrum, the older-white-male view of the world,” she says. “Certain groups feel excluded, so in practice the opposite of inclusivity is achieved.” The solution is to include diversity in the development of the culture, which in practice requires a deliberate set of actions, such as increasing the number of managers from diverse backgrounds. “You need to attract and retain this diverse talent through a strong focus on diversity and clear leadership from the top of the organization,” Kruse says. “The two are linked, and you cannot achieve one without the other.”

Multiple benefits follow. “It makes infinite business sense to widen the talent pool as broadly as possible,” Miller’s Downey exclaims. “Teams with greater diversity deliver better decision-making and are more innovative.” On the inclusion side, she says, being values-led has proven a big benefit. Younger candidates expect it. “Finally,” she says, “we see it as a competitive advantage over the competition, since our clients are diverse, so it makes sense.”

Making It Work

If fostering D&I is more than just the right thing to do, making it work to deliver business benefits must be carefully considered and strategically implemented. Seema Bradbury, chair of insurer ArgoGlobal’s D&I Committee and its chief risk officer for international business, says it’s important to avoid a one-size-fits-all initiative. “The D&I program must link back to the organization’s core values and culture if it is to provide true business benefit and not be sidelined or undermined,” she says. “The program needs to be fit for purpose, authentic and appropriate for an organization of our size and the locations within which we operate.”

That’s not always easy, Downey says. “Where organizations are led primarily by white men, it might be difficult for leadership to understand the challenges,” she says. “Getting alliances formed and gathering real-life experiences about comments and slight micro aggressions that happen in life—that lived experience feedback—is very powerful.” Miller has adopted this approach through its creation of executive-sponsored alliances, helping to highlight and respond to any issues identified.

An alignment with organizational culture is also essential. Bradbury says Argo wanted to keep it simple. “Having canvased a number of different organizations, both insurance and non-insurance, the most effective and successful programs were those that focused on a small number of areas before moving to the next tranche of initiatives,” she reveals. “This is a very broad subject, and it is impossible to tackle all things all at once. You can’t boil the ocean!”

Garba points out that organizational culture is closely linked to talent retention. “Many talent-retention issues are linked to culture,” he says, “so to reap the maximum benefits of diversity, companies need to develop their recruitment practices and simultaneously improve their culture by breaking down barriers, making daily activities more inclusive, reducing unconscious bias, and overturning workplace isolation.”

Companies need to explore different ways to source diverse talent, Garba says. “Often the usual London market recruiters don’t have much diverse talent in their candidate databases, so they struggle to present a diverse cohort.” To overcome this, he suggests, employers should explore different agencies and routes to talent, such as ACIN Recruit, his network’s own insurance jobs arm, which is focused entirely on luring ethnic-minority graduates into the insurance sector and has links with multiple London-market employers.

Gulmohamed, from Axis, says companies must keep D&I as a key board- and executive-level focus area. More importantly, he says, they must find ways to measure their progress and be transparent where they are not making headway. “Success will require commitment from all stakeholders, and good communication and dialogue within companies will be a key driver of improvement,” Gulmohamed says. “Clearly, change takes time, but demonstrable cultural change is vital if we as a market want to be an attractive place for the workforce of the future and if we want that workforce to reflect the diversity of our customer base.”

Much remains to be accomplished, he says, whether addressing the gender imbalance at the top or improving the London market’s overall diversity. “I will call out cultural and ethnic diversity, particularly at the more senior end of our industry,” he says. “I have seen a great deal of change, but the London market has more work to do to attract talent from different backgrounds at all levels to reflect the diversity in society.”

Gulmohamed reports that the conversations he’s had lately reflect commitment to change, real discussion, and honesty about the pace of progress. For a global market steeped in tradition, the transition to diversity is not proving straightforward, but the value of the shift is now universally recognized, and all indicators are positive.