Insurance is about numbers, and right now the numbers are depressing when it comes to minority and women agents in the business. In spite of the tremendous growth of minority populations in the United States and the success of women in many other business fields, both lag behind in the insurance business.
According to the Independent Insurance Agents and Brokers of America’s (IIABA) 2002 Agency Universe Study, African-Americans constitute only 0.8 percent of agency principals, while Asian-Americans tally 1.3 percent and Latinos 1.8 percent.
The numbers are worse for non-principal agency managers, and the figures for non-principal producers are only slightly better, with no minority group accounting for even 2 percent of the agency universe.
The minority market emerges
These figures contrast strikingly with the trends in society at large, as reflected in the 2000 U.S. Census, which saw the number of Latinos grow 58 percent from 1990 to 22.4 million people, or 9 percent of the total U.S. population. The African-American population grew 16 percent to nearly 30 million, 12 percent of the total. Asian-Americans, meanwhile, saw their numbers nearly double to 7 million, now about 3 percent of the total U.S. population.
The Census’s regional breakdown shows that in both the West South Central region of the country (Texas, Oklahoma, Arkansas and Louisiana) and in the Pacific West (California, Washington, Oregon, Alaska and Hawaii), minorities now account for 18 percent of the population.
The Census projects that minorities will account for a full third of the nation’s people by 2010. It’s a growth market. The major insurers realize this, and many have put in place emerging markets divisions to try to tap it. But the distribution side, the world of independent agents and brokers, has clearly lagged behind.
Disappointment with lack of minority agents
“We were already committed to an urban market focus prior to the 2000 Census,” said Donald W. Davis, emerging markets director for Travelers. “But it brought some reality to bear on where various groups are living and how populations are changing. It confirmed what we already knew but gave us the data to apply what we already knew.”
Davis expressed disappointment at the number of minority-owned agencies. “Perhaps in a perfect world that could improve,” he said. “I think it is appropriate that the opportunity be made available. For us, it’s a matter of identifying agencies who have a focus on long-term growth and can match their business with our corporate philosophy. Having agencies of various nationalities makes it easier to identify with their customers.”
Davis said consumer focus groups have shown that an agent’s ethnicity or race is not a “must-have” for them as buyers. Affordability, availability and quality of insurance products took precedence.
Still, Davis said, “We’re dependent on agents who know the culture, know the language and know the buying habits” of the minority consumers they are trying to capture.
Understanding cultural sensitivities
“It’s simple,” said Roosevelt Haywood III, chairperson of the National African-American Insurance Association (NAAIA) and principal of Haywood and Fleming Associates in Gary, Ind. “It’s about the bottom line.
“The face of America is changing,” Haywood said, “so wouldn’t it make sense to be part of that change, business-wise? If you want to link, if you want to affect, if you want to engage that emerging market then it only makes sense to have your people in the distribution levels, the people that are in the servicing, the people that are analyzing that market … they need to be of that market to do it effectively.”
Minority agents are better able to navigate cultural sensitivities, according to L. Anthony Corlette, CEO of Long Beach, Calif.-based general agency Star Alliance Insurance Services.
“Lots of times people will perceive the Hispanic community as just the Hispanic community,” Corlette said. “But Puerto Rican businessmen, Mexican businessmen and Cuban businessmen are very different. Just to paint them with that broad brush is not true. Chinese do business very differently from Koreans, Japanese, etc. You can’t just say, ‘the Asian community.’ There are very distinct cultural issues and sensitivities.”
Corlette, an African-American, partnered with Mark M. Endo, who is Japanese, to form Star Alliance in 1998, which they believe is the only multi-ethnic agency of its kind in the country.
With all the advantages one would expect to accrue to minority agents, why is the number of producers, let alone agency principals, so low?
“It’s a tough business to get into and survive,” said Matthew H. Cooper, CEO of Inner-City Underwriting Agency Inc. in Chicago., who started his agency in 1995 after two decades with Johnson & Higgins and Alexander & Alexander.
Standard markets elusive
One problem the small number of minority-owned agencies face is trying to access standard or preferred markets for their traditionally underserved urban customer base, according to Corlette.
Star Alliance provides its 430 appointed producers access to markets with Zurich, St. Paul, Chubb and the Hartford, among others. Travelers has begun a mentorship program in Atlanta, Washington, D.C. and Baltimore which partners fledgling agencies with strong Travelers agents in the area.
The partner agencies can place business with Travelers through the mentoring agency and keep the commission while paying a fee to the mentoring agency. This mentoring relationship can last anywhere from 18 months to five years, Davis said.
Meanwhile, the IIABA will launch a pilot program later this summer targeted specifically for minority agents, according to Diversity Task Force staff liaison Barbara Miller-Richards. The eight days of training over the course of a year will cover sales, strategic planning, management, customer service and more.
CNA, Chubb, Safeco, Travelers, Zurich and MetLife are the companies represented on the Diversity Task Force, along with a number of agent representatives.
According to Star Alliance’s Corlette, another difficulty small, minority-owned retail agencies have is branching out beyond a focus on personal lines, such as homeowners and auto to commercial insurance.
The market for such business is clearly growing, according to a Conning Research report which found that $13 billion in commercial insurance premium nationally is generated by minority-owned businesses. Five states—California, Texas, Florida, New York and Illinois—account for 60 percent of these premiums and more than half of minority-owned businesses, according to the report.
California’s minority-owned businesses alone generate $2.6 billion in commercial insurance premiums annually.
But at this point, just getting minorities into the business at all seems to be a challenge. A key beginning step is to increase awareness among minorities about careers in insurance and as insurance producers, NAAIA’s Haywood said.
“I didn’t think about entering the insurance industry until I had an opportunity to get my eyes open and look at what it has to offer,” Haywood added. “If we’ve got a [NAAIA] member like Denise Lloyd who insures three major airports, that lets me know African-American insurance professionals can make it in this business. That’s why an association like NAAIA is so important. It allows us to network from coast to coast, North to South.”
You’ve come a long way?
While the number of minority agents is extremely low, women have covered a lot of ground. Despite making up more than half of the U.S. population, women account for only 25 percent of agency principals and only 29 percent of non-principal producers, according to the Agency Universe Study.
Women do account for 57 percent of non-principal agency managers, however, and they dominate CSR positions with an 81 percent tally.
The numbers are surprising to Gayle Hudson Farr, principal of Underwriting Managers Inc., where she took over for her father, Clarke Farr, when he retired. “I’m a little surprised it’s that good, frankly,” she said. “It’s the good old boys’ club. This is definitely a male-dominated industry.”
Hudson Farr said that aside from fitting into the men she had to do business with in agencies and insurance companies, she also had to step outside her father’s shadow and that of her husband, Michael Farr, also a successful insurance professional.
“Not only had my father been in the business for 35 years,” she said, “but Michael was my dad’s partner, and so for the first few years I was doing it, people said, ‘Oh, isn’t she cute following in dad’s footsteps carrying on the family business.’ And, ‘Oh, she’s Mike’s wife.'”
Hudson Farr said that while only a quarter of agency principals may be women, many women are in decision-making positions.
“They may not own the majority percentage of the agency, but they are certainly very key to the function,” she said. “Women are executives, and they are making crucial decisions, negotiating company contracts, making investment decisions and more.
“Insurance is traditionally very conservative,” Hudson Farr added. “It doesn’t surprise me that it might take a little longer in our industry than it does in other areas. That’s just the way conservatives are—they don’t take change very well. … Women have always been involved in insurance, and now you’re seeing them at the executive level. They say, ‘I’m going to start my own agency.’ And they should. They should step out there.”
Good insurance people wanted
Whether the issue is race, ethnicity or gender, it’s clear that in the final analysis success or failure will be judged by the bottom line.
“We’re pretty good insurance people,” Corlette said of the staff at Star Alliance. “We happen to be ethnic minorities, but at the end of the day we’re pretty good insurance people. That crosses all ethnic and racial lines.”
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