Report delves into DE&I practices in the insurance industry

The International Association of Insurance Supervisors (IAIS), a voluntary membership organisation of insurance supervisors and regulators from over 200 jurisdictions, has released its latest report on the insurance industry’s diversity, equity, and inclusion (DE&I) practices.

The report aims to take stock of work on DE&I already being implemented by insurance supervisors, relevant international organisations, and the insurance industry to identify areas where the IAIS could do further work  to support its missions and strategic plan.

IAIS’ key findings about DE&I practices

The report’s key findings include the following:

• Over half of the supervisors that responded to the survey attributed a medium or high priority to taking supervisory action to promote DE&I within insurers, with the remainder viewing it as a low priority. Meanwhile, the supervisors who deemed DE&I a high priority made it one of their strategic priorities, often focusing on corporate governance and board diversity;
• Most of the respondents said they had a supervisory mandate to act, while a few said they did not or that they faced other legal constraints;
• Several jurisdictions see insurers’ governance as a key area for supervisory activity on DE&I, aligning with Insurance Core Principle (ICP) 7 on corporate governance;
• Regarding market conduct, the report found less supervisory focus on the concept of DE&I, although most of the supervisors reported having conveyed to some extent their supervisory expectations that insurers conduct their business by promoting customer DE&I; and
• A third of the respondents analysed the state of DE&I in the insurance industry in their jurisdiction.

APRA welcomes IAIS’ DE&I report

APRA, a member of IAIS, said that it recognises that strong DE&I practices are essential to ensure the financial system better supports the economy through well-run entities and sound financial markets that can respond to the community’s diverse needs.

“A resilient financial services sector is one that can bring together and respond to different views and perspectives, so that opinions and ideas can be raised, and decisions challenged effectively, thereby enhancing governance and risk management,” APRA said in a statement.

“APRA has also previously spoken about the importance of boards comprising people from a range of professional and demographic backgrounds to facilitate better decision-making and stronger risk management.

“APRA will consider how it might strengthen consideration of inclusion and diversity across its regulated industries as part of this year’s review of Prudential Standard CPS 510 Governance.”

Aside from DE&I, APRA’s priorities for 2023 are the following:

• heightened supervision on cyber resilience through detailed assessments and the strict pursuit of breaches;
• embedding capital reforms for banks and insurers;
• continuing to hold trustees accountable to improve superannuation member outcomes; and
• pursuing ongoing work to address challenges in the availability, affordability and sustainability of insurance.