CDI Insurance Diversity Task Force 2013 Report to the Insurance Commissioner



CDI Insurance Diversity Task Force Inroduction

May 10, 2013

California is home to a $123 billion insurance industry. The Golden State is also known for and proud of its diverse population, as well as its robust and ever-growing diverse business economy. In an effort to establish and encourage a strong partnership between these entities- the state’s insurance industry and diverse businesses- Insurance Commissioner Dave Jones established the first ever Insurance Diversity Task Force of the California Department of Insurance. The mission set forth for the Task Force was to consider and make recommendations about diversity issues in the insurance industry. The Insurance Diversity Task Force is proud to present the 2013 Report to the Insurance Commissioner to fulfill this obligation.

In a growing trend within the financial services industry, the Commissioner and Task Force recognize the amazing potential and opportunity to address issues of diversity within the insurance industry. Specifically, these efforts are meant to encourage diversity amongst insurer governing boards and increased procurement from diverse suplliers. As seen in other industries, this relationship has been a win – win – win for all parties involved, the insurer, the diverse business, the consumer.

  • To the insurer, increasing procurement from diverse suppliers can result in more competition for bids and thus decreased costs to the company, as well as enhanced quality, creativity and innovation within those bids.
  • To California’s minority-, women- and disabled-veteran owned businesses (MWDVBE’s), this represents an open door to a once seemingly impenetrable market and thus increased business opportunities.
  • To California, and especially its communities of color, this translates to a stronger economy and more job opportunities (as small businesses account for the largest percentage of new jobs), as well as a new pipeline and connection to a sector of the financial services industry that does not currently exist for the state’s diverse communities.

Under the leadership of Insurance Commissioner Dave Jones, the Insurance Industry Task Force are eager to continue to address the important and necessary issue of diversity within the insurance industry and excited to set the stage for similar work in other states across the nation.

The 2013 Report to the Insurance Commissioner includes the formation of and information about the Insurance Industry Task Force; a summary of the activities that have been completed to date (including analysis of the Department’s 2011 Voluntary Data Call to insurers and the first ever Insurance Diversity Summit); Assembly Bill 53, which mandates insurer reporting on supplier diversity efforts; and, finally, recommendations from the Task Force on how to encourage diversity in California’s insurance industry.

INSURANCE DIVERSITY TASK FORCE

Mission
In January 2012, Insurance Commissioner Dave Jones announced the formation of an Insurance Diversity Task Force to consider and make recommendations about diversity in the insurance industry, including the diversity of corporate governing boards and procurement from diverse businesses. Specifically, the mission of the Task Force is to:

  • Identify and promote insurance companies that are actively engaged in diversity issues;
  • Explore the status of diverse representation on insurance company governing boards;
  • Identify actions that the Department of Insurance can take to encourage insurance companies to increase procurement with diverse suppliers; and
  • Provide recommendations in regards to current legislation and suggest changes to existing law.

Task Force Members
Insurance Diversity Task Force Members were appointed by Commissioner Jones in January 2012. Members of the Task Force include:

Melinda Guzman (Task Force Chair) is the sole shareholder of Melinda Guzman Professional Corporation, a certified Woman and Hispanic owned law firm. She serves as Director of the Federal Home Loan Bank of San Francisco where she is Chair of the bank’s Governance Committee. She is also a member of the National Association of Corporate Directors, General Counsel to the California Hispanic Chambers of Commerce, Trustee Emeritus of the California State University Board of Trustees, and former General Counsel of the United States Hispanic Chambers of Commerce. Guzman has over 25 years of experience representing insurance companies and insureds in coverage, defense and bad faith matters.

Cecil Autry is Associate Vice President and Regional Counsel for Nationwide Insurance Group. Nationwide has received various awards for its committment to diversity and inclusion, including the 2011 Diversity Initiative Achievement Award by the National Association of Women and Minority Owned Law Firms, 40 Best Companies for Diversity in 2011 by Black Enterprise, and Top Companies for Diversity and Inclusion in 2011 by Uptown Professional.

John Casas is President and majority owner of JT2 Integrated Resources, the nation’s largest Hispanic-owned third party administrator (TPA), handling workers’ compensation and liability claims programs for California’s self-insured public and private entities. He is a long-standing member of the boards of directors for the California Hispanic Chambers of Commerce, the Spanish-Speaking Unity Council and the Oakland Work Investment Board.

David A. Castillo is President and CEO of The Gray Casualty & Surety Company, a national surety providing support to standard and specialty markets. He oversees Gray’s national expansion and has been instrumental in creating bond programs for the City & County of San Francisco and the City of Oakland. Castillo is recognized as the first Hispanic President & CEO of a surety company.

Sam Kang is General Counsel for the Greenlining Institute, a national policy, organizing and leadership institute working for racial and economic justice. He oversees Greenlining’s legal advocacy and has led several successful campaigns impacting state and national policy. Kang was previously a Coro Fellow and has been recognized as one of the top young Korean American leaders by the Network of Korean American Leaders.

Michael G. Keeley is the President of MGK Risk and Insurance, a certified minority business enterprise (MBE). He has worked for 32 years as an insurance industry professional in both carrier executive and broker capacities. Keeley was a founding member of the Black Insurance Professional Associations in Sacramento and Los Angeles, and currently serves as Chairman of the Board of Directors of the Black Chamber of Commerce, Member of SMUD Community Advisory Partners, and Board Member of the Greater Sacramento Urban League and the Insurance Education Foundation.

Phyllis Marshall serves as Counsel for the law firm of Manatt, Phelps & Phillips, LLP. She has more than 15 years of experience lobbying the California State Legislature and advocating for clients before Executive Branch agencies and other government offices and commissions. Marshall provides pro bono legal services to the California Black Chamber of Commerce and Women Escaping a Violent Environment (WEAVE).

Robert H. Mulz is the founder and current owner of Video Electronics in San Diego and Chairman of The Elite SDVOB Network, a nonprofit national organization of service disabled veteran owned businesses. He retired from the United States Navy as a Master Chief (E9) after 27 years of service.

Scott Syphax is the President and CEO of The Nehemiah Companies, a Sacramento-based social enterprise and development corporation. He leads the development team of Township 9-a 3,000 unit master-planned, smart-growth community in downtown Sacramento. Syphax serves as Vice Chairman of the Federal Home Loan Bank of San Francisco and as a Board Director for Norcal Mutual Insurance Company.

SUMMARY OF ACTIVITIES

2011 Voluntary Data Call to Insurers & Findings
In 2011, Insurance Commissioner Dave Jones requested that insurance companies participate in a voluntary survey (data call) to assess insurer diversity practices. All admitted insurers that collected more than $100 million in premiums from California were asked to complete the data call.

Results

  • 203 Surveys were sent out and 58 companies/groups responded (29% response rate)
  • 31 Insurers reported having a supplier diversity policy (53% of respondents)
  • 29 Insurers reported having a supplier diversity program (50% of respondents)

Diversity on Insurance Company Boards
Questions regarding governing board diversity were also included in the Voluntary Call. Of the 58 companies who responded,

  • 44 Reported having a woman on the governing board
  • 24 Reported having Latino representation on the governing board
  • 26 Reported having African American representation on the governing board
  • 7 Reported having Asian/Pacific Islander representation on the governing board
  • 0 Reported having Native American and Disabled Veteran representation on the governing board.

Results of the 2011 Voluntary data Call are provided in Appendix A

Insurance Diversity Summit
The Department of Insurance and the Insurance Diversity Task Force hosted a first-in-the-nation Insurance Diversity Summit on October 9, 2012 at the California Science Center in Los Angeles, California.

The Summit was designed to discuss and explore the issues of diversity within California’s insurance industry with stakeholders from all sectors. Specifically, the Task Force brought the state’s top insurers and diverse businesses together to provide a forum to discuss the importance of diversity in the insurance industry, best prcatices, how to overcome challenges faced by diverse suppliers, governing board diversity and Assembly Bill 53.

The event hosted over 200 attendees, including 62 individuals representing the insurance industry and 168 individuals representing diverse businesses across the state.

The Summit agenda included a keynote speech from Bernard Tyson, President and Chief Operating Officer of Kaiser Permanente and four distinct panels. These included:

    Panel 1- Assembly Bill 53 Implementation
    Moderator: Nettie Hoge, CDI Chief Deputy
    Assembly Member Jose Solorio
    Senator Curren Price
    Stacie Olivares-Castain, CDI COIN Managing Director
    Orson Aguilar, Greenlining Institute

    Panel 2- Best Practices
    Moderator: Michael Keeley, MGK Risk and Insurance Services Incorporated
    Ramon Jones, Regional Vice President, Nationwide Insurance Company
    Margaret Klinsport, Director Supplier Diversity Initiative, Allstate Insurance
    David Matzinger, Supplier Diversity Manager, State Farm Insurance
    Leonard McLaughlin, President, AON Cornerstone Innovative Solutions

    Panel 3- Challenges Faced by Diverse Suppliers
    Moderator: Melanie Shelby, Gray, Greer, Shelby & Vaughn LLC
    Emery Harlan, Chairman, NAMWOLF
    John Casas, President, JT2 Integrated Resources
    Monika Mantilla, President and CEO, Altura Capital

    Panel 4- Governing Board Diversity
    Moderator: Scott Syphax, The Nehemiah Companies
    Janice Hester-Amey, Portfolio Manager, Corporate Governance Unit, CalSTRS
    Diane Miller, Northern CA Chapter Chair, Nat’l. Association of Corporate Directors
    Luis Nogales, Founder and Managing Director, Nogales Investors

A detailed Summary of the Insurance Diversity Summit is provided in Appendix B

ASSEMBLY BILL 53 (SOLORIO, 2011)

On September 12, 2011, Governor Brown signed into law Assembly Bill 53, authored by Assemblymember Jose Solorio and co-authored by Senator Curren Price. Insurance Commissioner Dave Jones supported the measure and the Insurance Diversity Task Force provided advice and guidance during the legislative process.

AB 53, chaptered as California Insurance Code Section 927, now requires that each insurance company that collects $100 million or more in California premiums report on the company’s procurement efforts from minority-, women-, and disabled veteran-owned businesses.

The report will include the insurer’s supplier diversity policy statement, outreach and communication strategies to diverse business enterprises, and procurements from diverse businesses. The first report is due July 1, 2013 and updates are required biennially.

The Department of Insurance and Insurance Diversity Task Force worked closely with insurers, industry representatives and stakeholders to create the first Insurer Diversity Data Call. Drafts of the data call were sent out for review for feedback, suggestions and insight on how best to collect the report information, and a conference call with reviewers was held by the Department of Insurance to dicuss issues and concerns.

RECOMMENDATIONS TO THE INSURANCE COMMISSIONER

Highlight Companies Committed to Diversity Efforts

  • Publicly commend companies committed to diversity efforts, including companies that have had diversity programs in place and companies that recently began diversity programs.
  • Share best practices, programs and policies of companies that have had established diversity programs.

Host an Annual Event to Encourage Diversity Efforts

  • The annual event should increase awarness of and encourage a commitment to diversity efforts, provide insurance companies with the tools and resources needed to strengthen diversity efforts, and advise diverse businesses on best practices to engage with insurance companies and develop competitive bids.

Increase Focus and Awarness on Governing Board Diversity

  • Encourage insurance companies to diversify governing boards.
  • Provide resources and guides to insurance companies to help increase efforts to diversify governing boards.
  • Build strong partnerships with CalPERS– California Public Employees’ Retirement System and CalSTRS– California State Teachers’ Retirement System- to learn from the agencies’ work on governing board diversity.

Continue the CDI Insurance Diversity Task Force

  • Continue the Task Force, especially to guide and advise the Department of Insurance on implementation of Assembly Bill 53.

CONCLUSION

On behalf of the Insurance Industry Task Force, we are honored to serve Insurance Commissioner Dave Jones in this capacity and proud to explore and lead efforts around this important issue. California is home to a robust insurance industry and we believe that this can lead to significant and meaningful changes to California’s economy and the state’s insurers, diverse businesses, consumers and communities of color alike. One of the state’s greatest strengths is its diversity and it is imperative to recognize and utilize this strength in the context of our financial services industry as well.

It is our hope that the 2013 Report to the Insurance Commissioner serves as a resource for others interested in diversity issues within the insurance industry; a tool for organizations and stakeholders engaged and dedicated to diversity issues; and insight forn California’s insurance industry and its diverse businesses on how we can continue to work together to strengthen the economy through these efforts. Most importantly, we hope the recommendations set forth in the report serve to help guide the California Department of Insurance and Insurance Commissioner in their efforts to encourage issues of diversity within the insurance industry.

Finally, we would like to give special thanks to Insurance Commissioner Dave Jones and the staff of the California Department of Insurance for their hard work, commitment, energy and enthusiasm towards this initiative and for their support of the Insurance Diversity Task Force.

Chris Schultz, Deputy Commissioner, Community Programs
Melanie Ramil, Chief, External Affairs, Community Programs
Stacie Olivares-Castain, Managing Director, COIN
Tony Mar, Investment Officer I, COIN
Sukh Randhawa, Investment Officer II, COIN
Roxane Herrera, Investment Officer I, COIN
Anna Gragg, Investment Officer II, COIN
Durriya Syed, Community Programs Coordinator, Community Programs

Thank you for the work you do and thank you for the opportunity to serve the Insurance Commissioner and the State of California.

View complete Insurance Diversity Data Call Results– analysis of the California Department of Insurance 2011 Voluntary Call to insurers and the first ever Insurance Diversity Summit.

View complete 2012 Insurance Summit video.

Newsletter