National figures show increase in insurers’ procurement from diverse suppliers
News: 2018 Press Release
SACAMENTO, Calif. — Today California Insurance Commissioner Dave Jones announced the results of the national Multistate Insurance Diversity Survey (MIDS), which tracks supplier and governing board diversity in the insurance industry. Insurance commissioners from five states—California, the District of Columbia, New York, Oregon, and Washington – joined together in a multistate effort to collect information from nearly 800 of the nation's top insurance companies that collectively, account for nearly 70 percent ($1.27 trillion) of the nation’s $1.84 trillion insurance market.
The MIDS Initiative was established in 2016 to understand the state of supplier and governing board diversity within the nation's insurance industry. By promoting transparency, these efforts aim to encourage economic opportunities and increased procurement from the nation's diverse suppliers. MIDS originates from the California Department of Insurance’s Insurance Diversity Initiative, which was established by Insurance Commissioner Dave Jones in 2011 with the same goals. MIDS continues to build on the initiative by looking at diversity issues across the nation's insurance industry. Independent research also indicates that companies with greater governing board diversity perform better financially, providing a strong incentive for insurers to diversify their governance and suppliers.
“California's Insurance Diversity Initiative was established to open the doors of economic opportunity and encourage increased procurement from our state's diverse businesses, while also giving insurers the chance to see better prices and more innovative products from potential suppliers, as a larger supplier pool means increased competition for contracts," said Commissioner Jones. "We have seen great progress in California, and it is heartening to see this upward trajectory in diverse spend also reflected at the national level since we began working with my colleagues in five other states to implement the first national insurance diversity survey in 2016. Minority-, women-, LGBT-, veteran- and disabled veteran-owned businesses are an integral part of our national economy and they deserve the opportunity to compete fairly for business. I urge more insurers to increase their efforts in doing business with diverse suppliers, and I commend those insurers who continue to be champions in industry by proactively implementing strategies to diversify their boards and expand their outreach to our nation's talented pool of diverse businesses."
Results of the MIDS were released today at the 7th Annual Insurance Diversity Summit, found that in 2017, insurance companies spent more than $8.9 billion with diverse suppliers across the nation, marking a 15.6 percent increase since the survey data was first collected in 2015. The survey also revealed that in California, insurance companies spent nearly $1.8 billion with diverse suppliers -- more than in any other state – representing a 12.5 percent increase from last year. In Oregon, total diverse spend increased by 33 percent at $96.7 million since 2016. Washington experienced a sizeable 33 percent gain in the amount of money insurers spent with Women Business Enterprises at $44.3 million, while New York saw an all-time high in diverse spend for the Multi-Certified Business Enterprise category at $31 million. And finally, the District of Columbia showed significant gains in diverse spend among LGBT businesses with a 68.4 percent increase that topped $800,000. The multistate effort and survey are meant to increase awareness of business opportunities for diverse suppliers and provide for increased competition for insurer contracts that will help fuel economic growth and job creation.
While supplier diversity has continued to experience significant growth, governing board diversity remains a challenge. For 2017, MIDS results indicated that of the nearly 800 responding insurance companies, 15.4 percent reported zero women; 36.1 percent reported zero ethnic minorities, and 12.4 percent reported having zero diversity on their governing boards. In particular, women continue to be disproportionately underrepresented on insurer governing boards, occupying only 21 percent of a total of 2,615 board seats that were reported.
“The MIDS results on governing board diversity demonstrate the need for greater progress and it needs to start with a commitment at the top of the companies,” added Jones. “This is why I have written to California insurance companies that lack governing board diversity in order to offer them governing board diversity tools and resources so that they may take action on this important issue. Independent studies by McKinsey and others demonstrate that companies with more diverse governing boards have higher returns on investment and perform better.”
In addition to the national data collected, each partner state involved in the multistate effort continues to strengthen their own understanding of the extent to which insurers are contracting or procuring goods and services from their respective state's diverse businesses.
Since Commissioner Jones launched the statewide Insurance Diversity Initiative, California has seen a steady increase in the insurance industry in their procurement spend with diverse businesses. This year, California's insurers reported a diverse spend of 10.3 percent of overall total procurement, an increase from the 8.6 percent in diverse spend reported last year. The survey, annual diversity summit, and business matchmaking forum hosted by the department continue to build a platform that brings insurers together with diverse suppliers and provides a forum for meaningful discussions on how to promote diversity and economic opportunity.
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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.