What ethical obligations, if any, do insurance companies and independent agencies and brokerages have in developing a more diverse industry workforce by recruiting, training and promoting more women and minorities in their respective ends of the business?

Less than half of the respondents to that question believe there is 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 not worth pursuing.

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

There is no intent to insult anyone by this or any other ethical issue. The purpose of this series of articles is to encourage insurance practitioners to actively think about issues that may involve ethics.

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

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

“Our corporate officers determined what percentage of new hires should be minorities. The percentage varied based on the general population 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 of the diversity of our neighborhoods, states and nation.”

A media executive was a strong believer that diverse hiring in insurance is an ethical issue. “A diverse society is America's strength, and our ability to succeed as a society depends on our ability to mix, not segregate. I believe there is far more opportunity denied due to irrational prejudices than opportunity offered to minorities.”

A California brokerage executive supported diversity as an ethical decision: “Diversity is extremely important in our corporate makeup and the diversity of our clients. Too many in our business believe in diversity to avoid liability rather than embracing its obvious benefits. Insurers are ahead of agencies and brokerages in this area. I do believe our business has made good progress in diversity, but we have a long way to go.”

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

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

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

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

He said he also believes insurance has done a good job with diversity: “I challenge you to find an industry that has been more diverse over a longer period of time, except in primary education and nursing.”

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

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

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

Many respondents did not accept diversity as an ethical obligation because it did not focus on creating and delivering a better insurance product or an environment to deliver it.

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

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

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

An insurance consultant described his opinion in terms of insurance principles. “In selling and pricing we have a legal and ethical duty to avoid unfair discrimination,” he said. “In some lines, sex is a factor, but in all lines color of the skin does not matter. Insurers collect no data on the racial composition of their insureds. That same 'color-blind' principle should apply to recruiting and training individuals strictly on the basis of their potential contribution to the business.”

He added that “women and minorities can make a significant contribution and should not be overlooked. But neither should there be 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 an environment that acknowledges there is value to be derived from a diverse workforce,” this respondent said. “The key is to connect this value to the organization's overall goals–that is, link diversity to real business and client needs.”

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

Another agent wrote: “I think striving for diversity is a great long-term goal. However, as an industry we are having trouble attracting young people in general. We need to get a regular flow of new, young candidates into our business before we can even consider focusing on ethnic diversity.”

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

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

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

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

Peter R. Kensicki is a professor of insurance at Eastern Kentucky University in Richmond, Ky., as well as a member of the Ethics Committee of the CPCU Society in Malvern, Pa. He may be reached at ethics@eku.edu.

What Is NU's Next Question Of Ethics?

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

What, if any, ethical obligations do insurers and their agents have in communicating to clients their legislative positions and lobbying activities?

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

Please forward your responses by Jan. 1 to Dr. Peter R. Kensicki at ethics@eku.edu or via regular mail to his attention at Eastern Kentucky University, 108 College of Business and Technology Center, Richmond, KY 40475-3101.

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

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

Special Reports /

Is Hiring For Diversity An Ethical Stand?

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