The New York Department of Financial Services promotes diversity, equity and inclusion in the insurance industry
The New York Department of Financial Services (“NY DFS”) issued Circular Letter # 5 in March 2021, which informs licensed insurers about NY DFS ‘diversity, equity and inclusion expectations for the area.
On March 16, 2021, the New York Department of Financial Services (“NY DFS”) issued Circular Letter No. 5 (the “Circular Letter”) in which the NY DFS notified all domestic and foreign insurance companies state accredited expectations regarding the role of Diversity, Equity and Inclusion (“DCI”) in corporate governance and risk management. The circular letter describes what the NY DFS describes as DCI’s business case: among other things, DCI leads to better problem solving and risk management, drives profitability, and increases innovation. Accordingly, the circular letter calls on insurers to make DEI a business priority, including ensuring diversity in senior management, fostering a diverse pool of future leaders and communicating the importance of DEI to all stakeholders. (eg explaining how it will be achieved, setting goals and measuring progress towards those goals).
The circular letter is NY DFS ‘latest effort to advance DCI in the insurance industry. On July 31, 2020, the NY DFS promulgated regulations that adopted (with certain modifications) the National Association of Insurance Commissioners (“NAIC”) Annual Corporate Governance Disclosure Model Act and Regulation. The NAIC models and New York regulations require insurers to disclose, among other things, whether they have a diversity policy and how it works.
According to the circular letter, the NY DFS will collect data from domestic and foreign insurers in New York City with more than $ 100 million in annual premiums in New York City related to the gender, racial and ethnic makeup of their boards of directors and of their management as of December 31, 2019 and 2020, including information on the length of the term of the board and the main roles within the board and senior management. The data will be collected in the summer of 2021 and published on an aggregate basis in the fall of 2021. Additionally, the NY DFS will begin including questions relating to an insurer’s DEI efforts in its regulatory review process from from 2022.