New rules recently came into effect in the UK mandating that major insurers must consider ‘a broad set of qualities and competencies’ when it comes to recruiting board members, and to implement policies to better promote diversity at board level.
The rules apply both to firms’ subject to Solvency II and larger insurers that do not fall under its remit; insurers will have leeway to come up with their own policies to achieve better levels of diversity. The Prudential Regulation Authority (PRA) said that it believes insurers are well placed to determine the best routes to achieve this on an individual level, as ‘the areas requiring greater representation will differ across firms, and because the needs of firms will also vary’. Being prescriptive, it said, would be counter-productive: “Although measurable factors such as gender, age, tenure and race are important, diversity of approach, skills and experience are just as important to combat groupthink.”
“The recent publicity surrounding the first year of gender pay gap reporting has also highlighted why firms should be looking at ways of improving the diversity of their senior management teams,” commented Jon Fisher, an expert in financial services employment law. “The gender pay gap in financial services exceeds the national average and the only effective means to address that will be to improve the representation of women in senior roles.”