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Blog: Diversity and inclusion are essential to success in insurance

Diversity and inclusion

As data and technology become increasingly important to insurance, Mohit Manchanda, head of consulting for UK and Europe at EXL, believes ensuring the diversity of the teams owning the data, building and maintaining the algorithms, and providing audits means insurers will be better prepared to identify instances of bias.

Mohit Manchanda EXL
Mohit Manchanda, head of consulting for UK and Europe at EXL

Promoting a diverse workplace and striving to create a work environment that respects individuals and their contributions is integral to all organisations. Our people are respected for who they are, what they do, their differences and similarities. Diversity encircles our performance and services, the communities where we live and work, and the lives of our employees. 

As our workforce evolves to reflect the growing diversity of our communities and the global market, our efforts to understand and value diversity enable us to unleash the full potential of different perspectives, skills and competencies that are inherent in our people. Diversity and inclusion are key drives of success for us. We consistently strive to enhance the diversity balance within our organisations.

Diversity and inclusion are fantastic aims in themselves, but for insurance, in particular, they will be instrumental in helping the industry navigate disruption, especially digital disruption, and deliver better customer experience and greater shareholder value.

Insurers are concerned about growth and profitability in a challenging business environment, changing customer expectations and how their companies are being disrupted. Insurance companies are actively working to incorporate more automation, analytics and artificial intelligence while building new business models for the future. Diversity and inclusion is crucial to the insurance industry here through the concept of ‘diversity of thought’.

The concept behind diversity of thought, generally, is that teams diverse across the spectrum of economic, gender, sexuality, race, or other backgrounds, will enable a broader range of viewpoints and improve the probability of better business outcomes. This becomes especially crucial to transforming business operations, where process transformation requires a design thinking approach that views change through a 360-degree, customer-centric lens.

Motor insurance is unique in that due to regulatory requirements, it is one of the few products that must be purchased by everyone in the UK, regardless their background. With digital transformation, having fewer perspectives around the table risks missing new product opportunities or interacting with customers through their preferred channels. New business models of the future will also likely require more radical ways of thinking than what has come before.

The second place diversity and inclusion is crucial to performance in insurance is with AI. Insurers are increasingly digitising operations to create faster, more efficient straight-through processing. As more parts of the customer lifecycle are driven by algorithms, it might seem like humans, diverse or otherwise, have less of a role. In reality, the opposite is true.

AI, like all innovations, has a downside: the potential for bias. Without the proper controls in place, bias can seep into the machine learning process and quickly skew an objective analysis into a potentially discriminatory one.

Bias can come in the form of the types of data used or how the model interprets the data. For instance, if a machine learning algorithm for setting auto premiums was trained on a data set that had a disproportionate amount of unsafe drivers from a particular demographic, it would result in that demographic facing higher premiums or being denied coverage for risks they don’t actually present.

In these cases, a core benefit of AI – its speed – becomes a major drawback. Problems caused by a biased algorithm can scale quickly. It’s easy to find many examples of the negative impacts of bias in AI with a Google search, such as Microsoft’s crowdsourced Tay, an AI-powered chatbot that became a highly visible vehicle for hate speech in less than a day.

Companies are addressing the issue of ethics and bias in AI through governance programs including oversight boards, a focus on what and how data is used, and model transparency. By ensuring the diversity of the teams owning the data, building and maintaining the algorithms, and providing audits and strategic oversight, insurers will be better prepared to identify instances of bias and be better positioned for success.

Because of the unique position insurance holds as a truly universal product, industry leaders are in a powerful position to push for diversity and inclusion across the industry. By making sure that employees are not only hired from across the full spectrum of humanity, but empowered to present ideas and affect change, the insurance industry can set a powerful example of what inclusivity looks like in action.

Learn more about the 2019 Diversity and Inclusion In Insurance Awards

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