Insurance Is Too White and Male. These Female Execs Would Like to Change That

At a virtual session of the RIMS LIVE 2021 conference, two leaders explained how the traditionally white male insurance industry can make necessary changes.

For Jane Sandler and Laura Rock, diversity, equity and inclusion are personal.

Sandler emigrated to the United States from Ukraine at the age of 17.

“My journey was not always easy, but I am humbled by how far you can get if you set your intentions, take risks and work hard,” said Sandler, now vice president of global risk management at McKesson Corp.

Rock grew up in the United States but spent teenage summers in Saudi Arabia. She and her mother were not permitted to sit in certain seats on the bus, and Rock was only allowed to swim with a chaperone present.

“It made me much more conscious of the opportunities we have and the progress we made — particularly in terms of gender equity — in the United States. It also made me not want to be complacent about the barriers that persist today for many people,” said Rock, now chief human resource officer for Zurich North America.

Sandler and Rock shared their stories during a virtual session of the RIMS LIVE 2021 conference. They explained the importance of the insurance industry embracing diversity, equity and inclusion — particularly after global calls for racial equality in 2020. They also discussed how the pandemic is rapidly changing the future of work.

Taking an Honest Look in the Mirror

Attracting diverse talent is a logical first step for the traditionally white male insurance industry.

Jane Sandler, vice president of global risk management, McKesson Corp

That doesn’t mean simply hiring people from under-represented communities to entry-level positions. It means giving them opportunities throughout an organization’s hierarchy. If successful, the industry could help reverse a troubling national trend: 43% of Black private sector workers in the U.S. make less than $30,000 per year, compared to 29% for the rest of the population, according to McKinsey.

“It’s not enough to simply have diverse talent somewhere in the workforce ranks. Businesses need to be sure it’s at all levels,” said Rock.

Once hired, it’s crucial to drive a culture of inclusivity — which means the industry would need to make some fundamental changes.

“The golf course has traditionally been where a lot of our business is done. At the same time, for diverse talent, golf can be a barrier,” said Rock. “As an industry, we have to develop additional, inclusive ways to connect and provide all our employees opportunities to build those important relationships.”

It’s Not a Project, It’s a Journey

During their RIMS session, Rock and Sandler got specific about how their organizations are driving diversity efforts after calls for racial equality in 2020.

Zurich formed the Diversity and Inclusion Council with internal members as well as customers and community organizations. Its CEO signed the CEO Action Pledge — committing to increase equity for all, expanding training opportunities and supporting development and succession planning. The company also publicly shared demographics that currently show a 50/50 split between men and women, and the racial breakdown being 78% white, 8% Asian, 7% Black, and 5% Latinx. By sharing those numbers, they hope to propel company leaders to begin improving upon them.

“It isn’t something we see as a project or initiative. It’s a journey,” said Rock.

McKesson made similar efforts. It worked internally to develop a stronger, more impactful DEI strategy, created the new role of Corporate Impact Officer, and cultivated robust employee resource groups. The company also joined the United Nations Global Compact, promising to adopt sustainable and socially responsible policies, and upgraded offerings for LGBTQ employees.

Laura Rock, chief human resource officer, Zurich North America

“We want to enhance inclusiveness. We want open and candid discussions. And we want to confront our unconscious bias,” said Sandler. “It’s all about bringing your true self to work and encouraging others to do the same.”

That means, said Sandler, cultivating a “willingness to look in the mirror, be honest about where we fall short and then do something about it.”

The Digital Divide

The RIMS panelists also discussed how the pandemic is changing the future of work.

As people hunkered down and the digital work became the norm, a skills gap between digitally minded workers and everyone else widened.

That hurts underrepresented employees, they said. Offsetting that trend falls on managers who should accelerate the pace of continuous learning and cultivate empathetic leadership to support and prioritize development.

At Zurich, leaders launched a program matching internal workers with areas of need inside the organization, allowing managers to get the help they need and workers to up-level their skills. It taught workers new skills while simultaneously allocating resources to business units that needed them most (and away from areas where COVID-19 led to slowdowns).

“It’s like an internal gig economy platform,” said Rock.

There’s a war for talent and younger generations are typically not attracted to the insurance industry. That’s why upskilling and investing in existing workers is crucial.

“With this approach, we’re not going to struggle as much in the war for talent, because we’re not constantly churning,” said Rock. “And our employees have the chance to enhance their value. It’s a different approach to managing people than what has been traditional in Corporate America.” &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.