Culturally diverse boards of directors provide a significant, competitive advantage for insurance companies.
That’s the word from people in the know: three panelists, all of them board members at the multiline insurer Farmers Insurance Group, who presented on the closing day of the IICF Women in Insurance Global Conference. Held June 12-14 in New York City, the gathering assembled more than 400 women representing the world’s largest insurers, plus educational leaders and subject matter experts.
“Company with boards that mirror the diversity of their workforces and customers are the ones that will thrive in today’s global marketplace,” said Giselle Acevedo, who sits on the Fire Insurance Exchange board. “I can’t emphasize this enough.”
One reason, she noted, is that people of different ethnic backgrounds bring perspectives and life experiences to issues that might not otherwise be a priority of board discussions. Example: creating marketing campaigns or sales presentations so as to be sensitive to the customs or needs of particular communities.
“I’m a Latina and immigrant and so can speak to the views of people of color,” Acevedo said. “From a policy and shareholders perspective, I have to be able to raise these issues and do so independently.
“Also, policyholders want to know there are people on the board who look, act and think like them,” she added. “Diversity and good governance are interdependent and codependent.”
Culturally diverse boards have yielded significant returns on investment for companies across industries. Companies with three or more female board members outperform those with men only 60 percent on average, Acevedo noted.
The panelists cautioned, however, that companies can’t realize such gains by giving undue consideration to individuals’ backgrounds when endeavoring to diversify their boards.
When seeking candidates for board spots, competency comes first: the desired skills and professional experience are the prerequisites; the competency bar cannot be lowered to account for preferences as to candidates’ gender or ethnicity.
To be sure, few board recruits come to their positions with the depth of industry-specific expertise and knowledge of issues they will face in board discussions. So, freshmen board members should expect to spend quality time getting up to speed on the topics du jour, the panelists said.
“You have to have a foundational knowledge about the industry and the company to be effective,” said Dale Marlin, chair of the Fire Insurance Exchange and a Farmers Insurance Exchange board member. “To get educated on the issues, I read industry blogs and publications and consult with executives at Farmers Insurance. Don’t underestimate the time required to become conversant on the issues.”
To be effective, she added, new board members may also have to hone technical and analytical skills to properly interpret financial metrics. And they need to be well-versed in relational dynamics, an aspect of emotional intelligence needed to effectively navigate the give-and-take of board meeting debates. Marlin noted that women have an advantage over their male counterparts in this regard, in that they tend to be more inclusive and accommodating of other points of view in discussions.
Gail Jackson a board member of Fire Insurance Exchange, agreed.
“As a solo medical practitioner, I’m solely responsible for my decisions,” she said. “But when serving on a board, I have to interface collaboratively with others who bring complementary skills and experiences to the table.
“We all have to work towards achieving a consensus about what’s best for our policyholders,” he added. “To do that, you have to be open to the viewpoints of members who think differently about the world.”
By the same token, you also need to be prepared to press an argument or broach uncomfortable points if you believe that an issue is not receiving its due. Being assertive can be all the more difficult when you’re the only one raising diversity issues on the board, and when you’re aware that your positions and votes are under heightened scrutiny, Acevedo said.
“When something doesn’t feel right, you may have to address an issue privately with fellow board members, she said. “At other times, an open airing of a position is fine. It’s a constant balancing act.”
The panelists noted the skills required to perform their full-time jobs, and their experience serving on other company and nonprofit boards, have also proved instrumental to their contributions to board discussions at Farmers.
How does one go about securing a board seat?
Deborah Aldredge, Famers Insurance’ chief administrator officer and the session moderator, said one should get involved with entities — nonprofits, foundations, community organizations, among others–that can connect them with people who may be able to sponsor their candidacy for a board slot.
Marlin observed that board aspirants also need to get outside of their comfort zone and take risks. That may entail, as in her case, calling on significantly older or more experienced executives when pitching one’s candidacy.
Acevedo concurred, adding that board seat-seekers should also be forthright in stating their aims to executives who might champion them.
“It’s important to speak your intention,” she said. “Tell them you want to serve on a board, the reasons why and what you bring to the table. You have to be clear in stating your objective.”
Jackson, a Los-Angeles-based physician specializing in obstetrics and gynecology, is affiliated with the Cedars-Sinai Medical Center. Marlin has more than 30 years of experience in the information technology industry, much of it spent as an IT services consultant at IBM.
Acevedo is the former president and CEO of Para Los Ninos, a nonprofit organization in Los Angeles. She also previously served as president and general manager of Hoy, a Spanish language newspaper; vice president of public affairs at the Los Angeles Times; and in other public relations positions.