(Re)insurance is a complex business, and the ability to accurately assess and manage risks is paramount. Traditionally, the industry has relied heavily on data, actuarial models and statistical analysis to assess risks.
Today, however, an increasing number of (re)insurers are recognising the value of a diverse workforce, known as diversity and inclusion (D&I), in enhancing their underwriting, risk management and broader operational practices.
Diverse perspectives on risk assessment
One of the main advantages of having a workforce made up of individuals from diverse backgrounds is the wealth of perspectives it brings to the table. Individuals from different experiences and cultures can each offer unique insights into risk assessment – we need to hire people who think, act and respond differently to ourselves.
This diversity allows (re)insurers to understand risks better and evaluate them from multiple angles, with different employees able to identify potential risks that others may overlook due to their unique viewpoints. It also makes for better organisations, beyond just underwriting.
Furthermore, risk does not exist in isolation – it is influenced by an array of factors, from internal market dynamics to global macro events. With the ever-increasing interconnectedness of risk, diverse teams are better equipped to identify emerging risks, challenge data and assess the potential impact.
Whether it might be in terms of understanding the intricacies of a specific industry or navigating cultural nuances in various markets around the world, teams with greater diversity of thought and perspectives will be able to provide a more comprehensive and holistic view of risk.
Diverse teams have also been described as being the ‘engines of innovation’, and this is unsurprising. Teams with varied backgrounds, personalities and experiences can bring a multitude of thoughts and viewpoints to a discussion, possibly generating new ideas and solutions. For (re)insurers, this innovation may extend to the development of new risk assessment models, analytical approaches and underwriting strategies.
This is an industry in which staying ahead of emerging risks is essential, and the creativity and out-of-the-box thinking that diverse teams generate can be a game-changer, potentially creating innovative solutions to the complex risk challenges the world currently faces.
As risks get more intricate, we are also seeing greater demand for bespoke solutions. Insurance is ultimately about serving customers’ needs, and a diverse workforce can relate to a broader range of customers, understanding their unique needs, preferences and behaviours. This deep understanding can help (re)insurers develop more tailored insurance products and risk management strategies for their clients.
Reducing bias in underwriting
Whether we like it or not, we all have our own biases which are shaped by life experiences. Biases related to gender, race, age, or other factors can skew decision making, especially underwriting decisions, leading to inaccurate risk assessments. Having diverse teams and inclusive practices encourages employees to recognise and address these biases head-on.
By fostering an environment where challenging assumptions is the norm, diverse teams can ensure that underwriting decisions are based on merit rather than preconceived notions. The result? Fairer and more equitable risk evaluation that can align with the principles of improved profitability and social responsibility.
Attracting the best and brightest
At the end of the day, (re)insurers are only as good as the people they have in their ranks, and the importance of being a D&I-supportive organisation has become even more critical. It is now an absolute “must have” in a firm’s ability to attract and retain the best and brightest talent.
With today’s incoming batches of new hires, they are very likely to be attuned to current trends and feel more strongly about social issues. Many younger candidates view a company’s genuine commitment to a D&I culture and initiatives as being a major factor in deciding on their choice of employer, and would readily decline a job offer with a company that they perceive as being a laggard in this space.
(Re)insurers need to do more
Over the years, the (re)insurance industry has made some progress in terms of committing to and incorporating D&I to their business. It is imperative, however, to keep this momentum going. In addition to the financial benefits that research has shown, greater D&I within a company is critical to being able to assess, manage and underwrite risks better.
The industry is also competing with many others for new and upcoming talent and if it does not step up its D&I efforts, it risks losing out in the ‘war for talent’.
This article was written by Mark Newman, Asia Pacific chief executive at Canopius. Newman is based in Singapore.
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