Diversity fuels innovation
“Diverse” isn’t a term that comes quickly to mind when most people think about the global insurance and reinsurance industry. Although our industry is not alone in having a lack of gender diversity in top leadership roles, if we dig beneath the surface, our industry really is quite diverse.
Diversity depends on how we measure it. Many people consider it a function of gender, race or ethnicity. Coca-Cola’s 1971 TV commercial featuring a rainbow cast singing “I’d Like to Buy the World a Coke” or Benetton’s United Colors campaign of the 1980s are a shining examples. But there are other ways to think about diversity.
The Center for Talent Innovation in New York has done interesting research that classifies diversity in two types: inherent diversity -- the different traits we are born with, such as gender, ethnicity, and sexual orientation; and acquired diversity -- traits we gain from experience. CTI calls this combination two-dimensional, or 2-D, diversity, and concludes that serial innovation, the kind that drives and sustains growth, is linked to inherent and acquired diversity. CTI found companies with 2-D diversity out-innovate and out-perform others: these companies are 45% likelier to report that their market share grew over the previous year and 70% likelier to report they captured a new market. 2-D diversity unlocks innovation by creating an environment where “outside the box” ideas are welcomed and heard.
Coca-Cola and Benetton’s iconic commercials are a great illustration of inherent diversity. Viewed through an inherent diversity lens, the insurance industry doesn’t seem very diverse, particularly at the top. Let’s acknowledge that we have serious work to do to put more women in leadership roles. A study from Philadelphia-based Saint Joseph's University recently found:
• 17.1% of women in insurance hold board of director positions
• 8% are named inside officers
• 10% hold top C-suite positions
That’s an improvement from just a little over 12% of women in insurance holding board positions and 6% holding c-suite positions, just two years ago when this survey was last conducted. Still, these numbers look stark when we consider that women make up more than 59% of the total workforce in insurance, according to the US Bureau of Labor Statistics.
Acquired diversity is a different story. By that measure, I would dare to say our industry is quite diverse. Here’s why. Many of us began our careers in the insurance industry by accident. As a result, we bring previous experience or knowledge with us that make us even more effective.
At XL Catlin, for example, we have a cyber underwriter who worked in a corporate IT department for 10 years. He even has a certification as an “ethical hacker.” All our aviation underwriters have piloting experience from commercial airlines or military service. Our environmental insurance colleagues have degrees in environmental engineering or have previously worked as environmental consultants and have years of experience coordinating pollution cleanups or managing environmental, health and safety programs for their previous companies. Many in our construction vertical started their careers in engineering or contracting. And then are those who add an abundance of other skills and knowledge -- legal expertise, multilingual ability, marketing know-how, teaching, to name a few. What other industry attracts this much diverse experience?
Our industry operates in a global marketplace – XL Catlin, for example, can provide coverage in more than 160. Businesses in all industries can learn from diverse international opportunities and resources. Frédéric Rozé, CEO of L’Oréal USA, has worked in numerous countries, and he says the insights he gained internationally help inform product development and guide business practices.
Talent and innovation
Why do inherent, acquired and geographic diversity matter in the insurance industry? I see three reasons. One is that diversity enhances talent, and talent is the true differentiator. The people I work with at XL Catlin make our company distinctive. The second reason is diversity drives innovation. Attracting, engaging and keeping talent is where diversity and other programs that support it are essential. When we eliminate cultural barriers and champion diversity, and employees feel a part of the organization, feel valued, feel they can advance, they will stay and not seek out another place that will value, support and reward their inherent and acquired diversity. And lastly, as we are an industry that serves so many diverse industries, our diversity positions us to do a better job at providing that service.
The level of an organization’s diversity is directly proportional to its ability to innovate. A significant body of research shows diverse teams are more innovative and perform at higher levels. As Eileen Taylor, global head of diversity for Deutsche Bank, notes, “Diverse teams and companies make better decisions.” How do we, as an industry, harness a diverse workforce to drive innovation?
For starters, it’s important to establish a culture in which colleagues feel free to contribute ideas and it’s fun to do so. At XL Catlin, many colleagues like friendly competition. So we’ve built enterprise wide innovation competitions by encouraging business units to develop various contests and challenges to get colleagues working together and thinking about new ways to tackle the risks our clients face. It needn’t be about new products alone, either. One of our business units recently initiated a program to quickly find ways to improve processes and efficiency. It’s also important to share credit for success and provide a forum for product line leaders to boast their teams’ successes. Leadership commitment to diversity is also key.
When everyone looks, acts and thinks the same, is it any wonder they often fail to embrace—or produce—innovative and unconventional ideas? The best teams are greater than the sum of their parts, and XL Catlin has experienced that in our underwriting. Many of our business units literally have a roundtable process in which many minds come to the table to offer perspectives that help in making the final underwriting decision. This kind of collaboration has proven successful over and over. One example of XL Catlin’s commitment to collaborative innovation is XL Innovate, a new venture capital fund that seeks to create partnerships outside of the traditional underwriting space to find ways to underwrite currently uninsured risks – to find innovative insurance solutions.
It’s up to us
It’s up to each of us to make our industry more diverse. I see five ways that we can help promote diversity and innovation:
• Seek out new challenges. We need to push our own boundaries. There have been many books written and studies cited lack of self-confidence among female professionals and disparate favoritism toward male professionals for key “stretch” assignments -- a project or task given to employees which is beyond their current knowledge or skills level in order to “stretch” employees developmentally. The notion is that generally, men look for these assignments and actively lobby for them, whether they're qualified for them or not, while women are a little less active in seeking out these projects or work assignments.
• Talk to someone new every day. Networking plays a valuable part in everyone’s career. I can’t emphasis enough it’s importance – internally and externally. It has certainly helped many of us uncover opportunities, both for business as well as our careers-. I think it can do more and will be very important in our industry’s drive to be more innovative. To innovate, we have to reach out and discover for ourselves new alliances, find new friends, business relationships.
• Express an idea. Make a suggestion. It’s up to us, leaders of organizations, to provide ALL of our people with the opportunities, encouragement and resources to innovate. But it’s up to our people to take those opportunities, to contribute.
• Listen Up Collaborate. Give someone else a chance to be heard, to help out. Sometimes we can be so focused on the tasks at hand, our work responsibilities. We lose sight that others on our team have ideas about how to improve how we work. We all have to be better listeners.
In some ways, our industry has a long way to go in terms of inherent diversity. But we’re making progress. In other ways, we’re diverse in ways other industries can only dream of. To compete and win globally, we must also innovate. And if innovation is the engine of our business, diversity is the fuel. Not only must our industry champion diversity to attract and retain the best and brightest minds, we much each look for, create and seize opportunities to strengthen diversity and be the change we want to see in our industry.