Insurers and buyers of commercial insurance are more likely to have formal programs designed to foster diversity than brokers and other industry service providers, according to a Business Insurance survey.

While 69% of commercial insurance buyers have formal diversity programs, nearly as many — 65% — of commercial insurers have such programs. However, just 53% of brokers, 47% of third-party administrators, and 43% of risk consultants do, according to the survey.

Even though 57% of all organizations surveyed have some sort of formalized diversity program for their staffs, only 40% have similarly structured programs to recruit diverse talent.

Among insurance buyers, where about half have formal programs to recruit diverse talent, public companies, nonprofit and governmental entities are twice as likely to have a formal program as private companies, the survey found. By contrast, 50% of commercial insurers, 40% of commercial insurance brokers, and 35% of risk consultants have such programs.

Despite the scarcity of formal diversity programs within the commercial insurance industry, most executives surveyed were confident about their effectiveness, with 82% of insurers and 75% of brokers saying they were either very or somewhat effective in achieving their objectives. Similarly, 81% of commercial insurance buyers said they thought such programs worked.

While tracking the success of diversity initiatives may present challenges, Terri Austin, chief diversity officer at McGraw Hill Financial in New York, said they should be tracked “like any business initiative ... to determine progress from one year to the next.”

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“Some of the metrics, like employee demographics, are easy to track,” said the executive at the firm that provides credit ratings, benchmarks and analytics for the global capital and commodity markets. “Other more subjective metrics, like employee engagement or product innovation, can be more difficult to track. Engagement surveys can often serve as a tracking mechanism particularly for these "softer' metrics.”

The survey also found that mandatory diversity training is required by 70% of commercial buyer organizations, commercial insurers and consultants, but only 58% of insurance brokers.

When looking at how diversity evolves in any industry, the “first-mover” companies are those that engage consumers, said Bo Young Lee, global diversity and inclusion lead at Marsh Inc. in New York.

“Society at large changes more rapidly than our institutions,” Ms. Lee said. “Insurers and buyers are more likely to have to serve and respond to a rapidly diversifying consumer market. Since brokers are more likely to serve institutional clients, the change in demographic isn't happening as quickly. ... However, change is happening in the institutions. We see that shift every day. Those brokers who are early adopters of diversity and inclusion have a definite advantage in the long run.”

Deborah Stalker, deputy general counsel of the North America office of general counsel at Ace Ltd., said the insurer wants to foster a diverse culture globally.

That is “not just because it is the right thing to do, but because it will enhance the value of the company and be good for business and our customers, producers and vendors,” said Ms. Stalker, who also is president of Ace Women's Forum, a diversity program that began as a grass-roots effort in 2002 by a small group of women executives in Philadelphia. Formalized in 2007, the program has grown to 23 chapters throughout Ace's North American operations.

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While most companies within the insurance industry think diversity programming is effective, slightly more than one-third of commercial insurance buyers try to measure the effect of diversity on their organizations. Similarly, just 27% of insurers and brokers measure the effect of their diversity programs, while only 20% of risk consultants do.

“It is difficult to get precise measurements for a diversity program,” said John Lumelleau, president and CEO of Kansas City, Mo.-based insurance broker Lockton Cos. L.L.C. “There are both objective and subjective measurements to use. And it's more than just diversity. ... We want to know that all of our associates feel connected and empowered, that their differences are valued, and that our culture is inclusive.”

Among methods used to measure the effect of diversity programming, the most common are: identifying levels of diversity at all areas of the workforce, used by 66% of respondents; number of diverse employees recruited, used by 60%; and employee opinion surveys or diversity audits, used by 58% of organizations participating in the Business Insurance survey.

While the human resources department leads diversity efforts at the majority of insurers, CEOs are more likely to be held accountable than risk consultants. Human resources is accountable for diversity programs at 43% of insurers and 48% of insurance buyers vs. 18% of risk consultants. However, the CEO is accountable at 39% of risk consultants vs. 14% of insurers and 18% of insurance buyers. Among brokers, the CEO was accountable at 27% of firms, while human resources had that responsibility at 24% of the firms.

The survey on diversity practices, conducted online in September and October, included responses from 1,335 individuals. Forty-one percent of the respondents were brokers; 21%, insurers; 20%, insurance buyers; 15%, risk consultants; and 3%, TPAs. Questions concerning diversity practices were asked of individuals indicating their organizations have diversity programs.