What ethical obligations, if any, do insurance companies andindependent agencies and brokerages have in developing a morediverse industry workforce by recruiting, training and promotingmore women and minorities in their respective ends of thebusiness?

Less than half of the respondents to that question believe thereis an ethical responsibility to develop a more diverse workforce.However, no one believed that seeking diversity among employees,under the right circumstances, was either a bad idea or a goal notworth pursuing.

One who believed in the ethical obligation was succinct, andthis former risk manager was even insulted by the question: “Are you SERIOUSLY asking this questionin the year 2009? What rock have you been living under?”

There is no intent to insult anyone by this or any other ethicalissue. The purpose of this series of articles is to encourageinsurance practitioners to actively think about issues that mayinvolve ethics.

These articles do not focus on morals–that is, learning todistinguish between right and wrong. Rather, they focus onethics–about making choices when there are multiple “right”answers.

One executive saw diversity as an ethical issue. In a formerjob, he was responsible for hiring new employees.

“Our corporate officers determined what percentage of new hiresshould be minorities. The percentage varied based on the generalpopulation in the area in which the office was located,” he said.“This diversity-hiring practice made a big and positive difference.I see an ethical obligation to have our workforce representative ofthe diversity of our neighborhoods, states and nation.”

A media executive was a strong believer that diverse hiring ininsurance is an ethical issue. “A diverse society is America'sstrength, and our ability to succeed as a society depends on ourability to mix, not segregate. I believe there is far moreopportunity denied due to irrational prejudices than opportunityoffered to minorities.”

A California brokerage executive supported diversity as anethical decision: “Diversity is extremely important in ourcorporate makeup and the diversity of our clients. Too many in ourbusiness believe in diversity to avoid liability rather thanembracing its obvious benefits. Insurers are ahead of agencies andbrokerages in this area. I do believe our business has made goodprogress in diversity, but we have a long way to go.”

Most responding did not believe ethics were involved. A claimsexecutive, for example, wrote: “There are a myriad of reasons whydiversity is a moral and business necessity, but I do not believeit rises to a level of an ethical obligation.”

He added that “recruiting and maintaining a diverse work forceis critical to the essence of better communication and interaction.We deal with people from all walks of life, and need to have abetter partnership with colleagues, employees and customers. Anycompany truly wanting to improve its dialogue will not stand forignorance of others or all the other benefits of diversity.”

An Ohio agent believes agencies need to be diverse both insideand outside the office.

“To meet the emerging needs of customers and the methods ofcontacting customers, we need to know more about what they want andneed,” he said, adding that by having diverse employees, his agencycould better deal with the general population.

He said he also believes insurance has done a good job withdiversity: “I challenge you to find an industry that has been morediverse over a longer period of time, except in primary educationand nursing.”

A manager in an insurance company saw the ethical duty asattracting qualified people who “come from all walks of life. Ourcharge involves finding these individuals and presenting them theopportunity to be part of our business.”

“In order to remain relevant, we need people with diversebackgrounds,” this manager added. “I cannot allow myself to staywith one type of person because I would be moving the business awayfrom being relevant to the insurance-buying public. My obligationis to keep an open mind in my recruiting, training and promoting ofpeople. However, no matter who I seek, they must be willing to giveinsurance a chance as a career.”

An Indiana adjuster wrote: “I do not think the industry has anethical obligation to make it more diverse. It has an ethical dutyto not prevent or obstruct it from becoming more diverse. Theethical duty is to hire and develop qualified and ethicalpeople.”

Many respondents did not accept diversity as an ethicalobligation because it did not focus on creating and delivering abetter insurance product or an environment to deliver it.

For example, one agent wrote: “Diversity in itself does notcreate a better workplace. Quality does. I don't care if myunderwriters are black, white, female, or male. What I do careabout is that they are knowledgeable and willing to take risks.After all, that is what we are about–risk. There is no substitutefor excellence.”

An Illinois broker agrees. He said that employees in his firmare diverse but, in his mind, they are “sexless and colorless,”adding he is comfortable with the diversity ethics of hisbrokerage.

However, he added, “if we didn't make a profit because of ineptpeople, we wouldn't exist and 80 people would not have jobs. Theloss of those jobs because of a feigned attempt at diversity wouldbe unethical.”

An insurance consultant described his opinion in terms ofinsurance principles. “In selling and pricing we have a legal andethical duty to avoid unfair discrimination,” he said. “In somelines, sex is a factor, but in all lines color of the skin does notmatter. Insurers collect no data on the racial composition of theirinsureds. That same 'color-blind' principle should apply torecruiting and training individuals strictly on the basis of theirpotential contribution to the business.”

He added that “women and minorities can make a significantcontribution and should not be overlooked. But neither should therebe unfair discrimination in favor of or against these groups.”

An underwriter sees an ethical issue for insurance executives.“Our industry leaders have an ethical responsibility to foster anenvironment that acknowledges there is value to be derived from adiverse workforce,” this respondent said. “The key is to connectthis value to the organization's overall goals–that is, linkdiversity to real business and client needs.”

In a similar vein, a broker wrote: “I believe if a business setsgood standards, rewards good performance and recruits good rawmaterial, diversity will not be an issue.”

Another agent wrote: “I think striving for diversity is a greatlong-term goal. However, as an industry we are having troubleattracting young people in general. We need to get a regular flowof new, young candidates into our business before we can evenconsider focusing on ethnic diversity.”

An underwriter believed other issues were more important thandiversity as an ethical goal: “Whoever owns the organization hasthe right to decide how to staff it. Let the marketplace sort outwhat mix of staff will succeed, and what will fail. The ethicalimperative is 'Do no harm' and not 'Do good.' Business has noethical responsibility to 'do good,' other than to thrive byfinding customers and offering them what they want at the lowestpossible price. That's hard enough without also laying on diversityobligations.”

A West Coast investment advisor noted that “while it may be agood business decision to consider diversity, one isn't ethicallybound to do so. I believe that the ethical responsibility is torecruit the best person for a job without consideration of his orher characteristics. To not consider a good candidate in the nameof diversity would, in my mind, be unethical.”

In summary, almost universally, having a diverse group ofemployees was considered a positive for the insurance business.Generally there exists a belief that the industry either has amoral or business obligation to seek diversity.

However, the majority of those responding did not see diversityas an ethical issue, unless seeking diversity unfairlydiscriminated in favor of or against a group.

Peter R. Kensicki is a professor of insuranceat Eastern Kentucky University in Richmond, Ky., as well as amember of the Ethics Committee of the CPCU Society in Malvern, Pa.He may be reached at [email protected].

What Is NU's Next Question Of Ethics?

Insurance company and agency executives are often active on thelegislative and regulatory front, lobbying local and federallawmakers to influence policy on a wide range of areas critical tothe industry–including tort reform, workers' comp reform, the useof credit scoring, health care reform and coverage for those incatastrophe-prone areas, to name just a few hot topics.

What, if any, ethical obligations do insurers and their agentshave in communicating to clients their legislative positions andlobbying activities?

Should they ethically not impose their political views onclients, or actively engage customers to join their variouscampaigns on the premise the changes sought are in their clients'ultimate best interests?

Please forward your responses by Jan. 1 to Dr. Peter R. Kensickiat [email protected] or viaregular mail to his attention at Eastern Kentucky University, 108College of Business and Technology Center, Richmond, KY40475-3101.

Please include your role in the insurance business–agent,adjuster, risk manager, etc.–and keep in mind that the identitiesof all respondents will remain confidential.

Responses will be summarized in the March 15, 2010 edition ofNU.