New data shows insurance industry spent $3.1 billion with California diverse businesses
News: 2022 Press Release
SACRAMENTO, Calif. — New data from the California Department of Insurance suggests that, while more is still yet to be done, there is ample room to continue to push California’s $409 billion insurance industry into partnering more with the state’s diverse small businesses. These new findings are key to helping consumers, investors, and policy leaders hold insurance companies accountable on their public commitments to advance diversity, equity, and inclusion.
The latest results from the California Insurance Diversity Survey (CAIDS) — administered by the Department’s nationally recognized Insurance Diversity Initiative — reveal that, in 2021, insurance companies spent approximately $3.1 billion with California diverse businesses, or suppliers. While this is more than double the amount reported in 2020 that showed insurance company spending on diverse suppliers was $1.5 billion, Commissioner Lara noted this is a small percentage of insurance companies’ total reported spending.
“The latest data shows progress is being made, but it also sheds light on opportunities for insurance companies to deliver even more on their public commitments to advancing diversity, equity, and inclusion,” said Commissioner Lara on CAIDS’ importance. “The evolving pandemic coupled with an economic forecast shrouded in uncertainty continues to underscore a critical need for the insurance industry to continue investing in diverse businesses and having corporate leadership that reflects the people who live and work in the most diverse state in the nation. These elements are the cornerstones to accelerating our state’s economic recovery.”
Survey results also revealed that diversity within the boardrooms of insurance companies improved slightly. Among the 376 (2020) and 386 (2021) insurance companies that reported to the Department, women still account for less than a quarter of insurance company boards. In 2020 and 2021, women’s representation in insurance boardrooms showed some improvement, with 22.8% and 23.8%, respectively. And yet, 17% of insurance company boards across both years still reported zero gender diversity.
At this rate, preliminary Department analysis estimates that it will take upward of 50 years to reach gender parity within the boardrooms of insurance companies. Ethnic diversity among insurance boards showed some modest gains among respondents as compared to prior years, 33% in 2020 and 31.3% in 2021.
Representation among board directors who identified as LGBTQ+ experienced only a fractional percentage gain from 0.6% (2020) to 0.7% (2021); this data continues to underscore the need for more inclusive practices that expand diverse board leadership.
“Diversity in corporate governance is one path that many insurance companies can take toward creating equity, and I recognize the companies that have demonstrated their commitment by aligning their intensions with their actions,” added Commissioner Lara. “As the data shows, there is opportunity for insurance companies to do even more — California consumers demand it.”
Under Commissioner Lara’s leadership, the Department’s nationally recognized Insurance Diversity Initiative in collaboration with its Insurance Diversity Task Force strives to advance equity and inclusion within the boardrooms of California’s insurance companies, and increase contracting opportunities for businesses owned by women, veterans, disabled veterans, LGBTQ+, and historically underrepresented people.
As part of the Department’s annual Insurance Diversity Summit, Commissioner Lara convened insurance company board directors, executives, policymakers, diverse business owners, non-profit leaders, and other government agencies.
In keeping with the Summit’s theme of “Magnifying Your Impact,” the Summit’s welcome plenary included remarks from California Attorney General Rob Bonta and Elmy Bermejo, Regional Administrator of the U.S. Small Business Administration. Commissioner Lara followed up with a keynote conversation alongside Susan Johnson, The Hartford’s Chief Diversity, Equity, and Inclusion Officer, focusing on sharing best practices that drive diversity, equity, and inclusion for the insurance industry.
Registered attendees are invited to partake in a series of business matchmaking roundtables and insightful webinars led by experts on the topics of race and diversity in the insurance industry, diversity in the boardroom, understanding the “nuts and bolts” of contracting with insurance companies, the latest information on the state’s funding opportunities available for diverse business enterprises, and how businesses can stay ahead of the curve by gaining insights on navigating emerging topics such as cybersecurity and algorithmic bias in the insurance industry.
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- The insurance industry collects $409 billion annually in premiums from Californians. The law requires Californians to purchase many types of insurance, including health insurance, automobile insurance, and workers’ compensation insurance.
- The national insurance market is $2.7 trillion.
- Additional information about the Insurance Diversity Initiative is on the Department’s website.
- Using demographic data from the 2020 U.S. Census, ethnically diverse board members continue to be underrepresented in the boardrooms of insurance companies.
- While the nation’s Latino population grew to 18.9% in the U.S., their representation in the boardrooms of insurance companies stagnated at 3.4% in 2020 and 2021. Among Black and African American communities that make up 12% of the U.S. population, only 7% (2020) and 7.8% (2021) of boards included Black or African American board directors.
- As a whole, Asian/Pacific Islander board directors continue to be disproportionately underrepresented on insurance boards, accounting for only 3.8% (2020) and 4.4% (2021) of board seats, whereas the Asian/Pacific Islander community collectively represent about 6% of the nation’s population.
- In particular, the absence of board directors identifying as Laotian, Cambodian, Vietnamese, or Pacific Islander are glaring reminders of the disparities that linger within the Southeast Asian and Pacific Islander American communities.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.