On Thursday, August 13, 2020, the National Association of Insurance Commissioners ("NAIC") held a special virtual session as part of the NAIC Summer 2020 National Meeting to discuss the role of the insurance sector in addressing racial inequality and promoting diversity in the US insurance industry. The NAIC stated that the session served as the "formal public kick-off" by the NAIC to examine its role in: "(1) addressing ongoing, potential racially discriminatory practices in the design, pricing and sale/access of insurance products, and (2) ways to promote diversity and inclusion within the insurance sector."
The program took place in three parts. The first panel, which was composed of consultants and experts, discussed the history of racial biases in the insurance industry, including discriminatory practices in underwriting and sales, and examined actions taken by former regulators in response to such practices.
The second panel, which included the Executive Director of the Center for Economic Justice, a university professor, and a retired insurance executive now turned consumer advocate, focused on current issues that the insurance industry faces in combating racial discrimination. The panelists delved into current practices and discussed potential issues with respect to areas such as (1) big data and algorithmic based models (which the Big Data Working Group considered recently as reported here), (2) access to quality and affordable healthcare, and (3) financial literacy and access to health products.
The third and final panel consisted of insurance regulators from several states who discussed their own experiences with racial biases, where they have seen examples of it in the course of their careers in the insurance industry and what steps they have taken to enact change in their jurisdictions.
In addition to the August 13, 2020 session, the NAIC recently announced that it has established a commissioner-level special committee on Race and Insurance (the "Race and Insurance Committee"), whose charges are centered on the recognition that the NAIC has "a historic opportunity as a regulator community and as an important sector of the financial services industry to commit real meaningful and lasting change". The Race and Insurance Committee's charges are:
- Conduct research and analyze the level of diversity and inclusion within the insurance sector.
- Engage with a broad group of stakeholders on issues related to race, diversity, and inclusion in the insurance sector.
- Determine whether current practices exist in the insurance sector that potentially disadvantage minorities.
- Make recommendations to the Executive Committee and membership by year-end regarding steps: (a) both insurance regulators and the insurance industry can take to increase diversity and inclusion; (b) that should be taken to address practices that potentially disadvantage minorities; and (c) to ensure ongoing engagement of the NAIC on these issues through charges to existing committees, task forces and working groups.
Looking ahead, the NAIC intends to schedule a new open meeting of the Race and Insurance Committee in September where stakeholders will be given an opportunity to provide comment on how the NAIC can address the relevant issues and opportunities.
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