Agents should understand the unintended effects of their agency’s practices on legally protected groups and should ignore emerging minority markets at their peril, a management consultant told a group of Illinois agents Wednesday.
Cheryl Koch, an agency management consultant and Independent Insurance Agents and Brokers of America certified best practices instructor, said that while most agents and brokers are well beyond any overtly racist, sexist or otherwise insensitive remarks or actions, they often conduct their business in such a way that have a disparate impact on those groups.
An example, Koch said, could be had right inside most agencies. “If you put all your CSRs and in one room and all your producers in another room,” she asked the audience, “what would each group look like?”
The CSRs would probably be overwhelmingly women and more likely to be of color, while most producers are middle-aged white men, Koch said.
“You may not have intended for your hiring to turn out this way, but your intentions don’t matter. It’s the outcome that matters,” she said.
Koch’s talk was part of a seminar called “The Insurance Marketplace and Workplace: Fair Access and Equal Treatment for All,” offered by the Professional Independent Insurance Agents of Illinois for three hours of continuing education credit.
One example of outright illegal behavior that Koch gave would be to refuse a quote to someone based on their appearance or even their accent on the phone, while giving a quote to another prospect giving the exact same information, different only in superficial characteristics such as race or ethnicity.
Agents for direct writers have been caught engaging in such practices by consumer watchdog groups, Koch said, and independent agents could be next.
Another example of unfair discrimination, according to Koch, would be to prejudge a property based on its location rather than its individual risk characteristics. Not only was such behavior, discriminatory, Koch said, but poor business practice. She pointed out that a property in a better neighborhood may be in worse shape, while a property in an average or worse off neighborhood may have just been renovated.
By prejudging prospects on inessential grounds, agents could be denying themselves access to newly emerging markets of immigrants and minorities now in a better position to afford different lines of insurance.
“We have a natural tendency to like people like us,” Koch said. “And that’s who our customers are. People like us. But think about it. How many more people are there out there who are not like you?”
The seminar, sponsored by the Travelers Group and other major carriers, also offered minority agents tips on how to access major markets to better serve their customers, though some in the crowd voiced frustration — as agents have generally — about how to attain direct appointments with highly rated standard carriers.
Some industry practices have raised the spectre of unfair discrimination, Koch told the group. Credit-based insurance scoring, in particular, has been criticized by California’s Insurance Commissioner John Garamendi, who has said it disparately impacts legally protected classes.
Koch told Insurance Journal that scoring is “a thinly veiled form of redlining,” and that until insurers explained exactly how their models worked, the practice should be avoided.
Lastly, Koch urged attendants to form an agency action plan to address any overt or unintentional discrimination in agency practices and also form a plan on how to target and ultimately capture emerging markets.
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