Businesses today face uncertain times, with every day presenting new challenges, new issues and new opportunities. Rising customer expectations, coupled with technological advancements and increasing amounts of data, are fueling the innovation in insurance industry. At the same time, growing cyber threat sophistication, an evolving socio-political environment, climate change, and new health/pandemic risks, make business disruptions inevitable.

By embracing diversity companies can survive and thrive in these turbulent times. Usually, diversity is thought about mainly from a perspective of social aspects, such as gender, race, ethnicity, age and sexual orientation (‘social diversity’). Social diversity continues to be vital, for a diverse mix of cultures, nationalities and religion is the core foundation on which our global business community rests. That said, in today’s dynamic and uncertain business landscape, the definition of diversity has been broadened to include diversity of talent and ideas, supply chain, geography and operations, and digital fluency. By bringing together all these different elements of diversity, combining social diversity and business model diversity, insurance organizations can be better prepared to capitalize on the opportunities presented now and in the future.

Without a holistic view of diversity firms can lose out in terms of talent acquisition, loss of innovative solutions and unfulfilled growth ambition. From the workforce to operational models, and supply chain, diversity of people, ideas and solutions is no longer a tick-box exercise. It is a critical driver for growth.

A business whose leadership and staff is only made up of people from one background, one community, one point of view will only be able to see a limited spectrum of ways to respond to newer challenges. Incorporating diversity, not only on the level of who a firm hires but in the voices it chooses to incorporate, develop, and elevate, is essential for overcoming today’s obstacles. Several firms have made headlines for distributing tone deaf communications or public relations initiatives. Diversity of talent, ideas and skillset can identify these problems before they become an issue.

Just as diversity is important for the people who work for a business, it’s also important in the way a business works. Just as a firm whose workforce is made up of only one type of demographic is more prone to failure, an organization with limited geographical presence is at risk of operational disruptions. Diversity of locations enables firms to seamlessly move processes from one area to another. Similarly in this interconnected world, over-reliance on one partner or a supplier not fulfilling their obligations can have a massive impact. Diversity of supply chains keeps this from happening.

Considering diversity at both a human and organizational level gives firms competitive advantage and more freedom in how they operate. Diversity is something that must be embedded into organization’s culture and its operating model.

Forward-thinking firms are embracing and committing to a broader definition of diversity as an internal strategy for not only improving profitability and outperforming the competition but also moving from a risk to a resilience mindset. As firms make this transition, these five vectors of diversity become key.

"Insurance companies have always thought about diversifying their portfolios as part of prudent risk management. However, today, companies need to broaden the definition of diversity - by being open to all people and possibilities, inviting different perspectives, and challenging the status quo. Embracing the five vectors of diversity is a must in today’s rapidly changing environment."

- Julie Haase, SVP and CFO, Global Retail Markets at Liberty Mutual Insurance

1. Social Diversity

The insurance industry serves the greater good of society so it is imperative the industry also reflect society. Most firms today practice and promote some degree of gender, racial and ethnic diversities amongst their staff. Some do so with conviction, others as a tick-box exercise. Diverse companies are better able to attract and retain talent, enhance employee satisfaction, align with customer needs, and drive better decision making, all of which contributes to competitive advantage and business growth.

Racial and Ethnic Diversity

Discrimination on account of ethnicity or race is one of the most pressing issues worldwide. Countless studies, research papers, and reports have explored this topic to find with stirring results. The report “Let’s Talk about Racism” from The Employers Network for Equality & Inclusion (ENEI) found that Black and minority ethnic workers (BME) experienced excessive workplace surveillance and scrutiny, discrimination during performance evaluations, and prejudice. A racially and ethnically diverse workforce, along with right corporate culture, can bring several benefits to a modern business enterprise, such as better societal representation, greater adaptability, higher employee productivity, increased creativity and innovation, and better alignment to a diverse customer base. There are studies to back this. For example, firms in the top quartile for ethnic diversity are 35% more likely to outperform competitors, according to McKinsey.

Despite this, a recent report on ethnic diversity of UK Boards from The Parker Review Committee, in association with EY and Department for Business, Energy & Industrial Strategy (BEIS), suggests that over 37% of the FTSE 100 have no ethnic representation on their boards. The FTSE 250 and FTSE 350 go a notch higher, with 69% and 59% respectively.

The insurance industry has taken some steps on ethnic diversity through initiatives such as The Insurance Cultural Awareness Network (iCAN) in the UK and The Big “I” Diversity Council in the US. However, according to a recent study by The American Bar Association (ABA), the insurance industry and the legal industry are among the least diverse industries in the US.

The industry should make it a priority to make progress in this area and expedite the adoption of measures such as setting diversity targets, disclosing diversity metrics and progress, and identifying targeted programmes and initiatives that can help high-performing BME individuals reach board levels. Having a diverse and inclusive board is key for driving real change within firms and in the wider industry.

Gender Diversity

There is empirical evidence from the International Monetary Fund that suggests a strong positive association between gender diversity in senior positions and corporate financial performance. A notable initiative for gender diversity comes from the UK’s Financial Conduct Authority (FCA), which is promoting comprehensive diversity reporting requirements.

Despite this, statistics from the Association of British Insurers (ABI) suggest that 21% of executive and 21% of board positions are held by women, compared with almost a 50-50 split at entry level positions. Clearly, firms need to have more gender diversity in higher positions to benefit from effective decision making and drive strategy for the future. Such diversity also improves crisis communication.

Diversity of Age and Experience

Diversity of age and experience is also vital. The CEO of Lloyd’s of London recently warned of a looming talent shortage in the insurance industry. Research has shown that only 4% of younger job seekers want to work in the insurance industry, and that 41% of people outside the insurance industry said the work “sounds boring.” It is not surprising that one of the goals in The Future at Lloyd’s strategy is the building of a diverse, inclusive environment. Similarly, the Women & Diversity: Expanding Opportunity in Insurance conference, recently co-hosted by the American Property Casualty Insurance Association, the Life Insurance Council of New York and the American Council of Life Insurers, explored recruiting and retaining young talent as a key focus area for the industry.

Recruitment and HR play a pivotal role in ensuring diversity and inclusion, including generating a diverse candidate pool, eliminating the unconscious bias in candidate selection, and promoting fair practices thereafter. At the same time, it is upon a firm’s culture and leadership to drive fair succession planning and growth path for all.

2. Cognitive Diversity

Cognitive diversity is a cornerstone for innovation. Just as social diversity is important, so is diversity of thoughts, viewpoints and skills. A diverse team brings forward a creative thought process and collective intelligence that challenges the status quo and finds newer ways of problem solving.

It might be natural to feel more comfortable around those who correspond to the similar set of ideologies, business styles, or common academic backgrounds. Perhaps that is why we prefer hiring our old mates, but as Matthew Syed puts, in his bestseller book Rebel Ideas, intellectual, knowledge and experience conformity tends to occupy echo chambers, leading to collective blind spots. These blind spots can stifle creativity and growth.

Companies are showing an increased interest in the value of cognitive diversity, in insurance and other sectors. For instance, firms including Google and Tesla (arguably two of the biggest names when it comes to innovation) are dropping specific college degree or experience requirements from their application criteria at the time of hiring. Instead, they are focusing on real-life experiences, which arguably better showcase problem solving abilities.

Psychometric assessments as part of evaluation criteria can offer good insights into ‘who’ the applicant really is. That’s one way of bringing cognitive diversity. Another is cross-breeding ideas and talent from other internal teams and departments.

But merely having a diverse team won’t solve everything. Firms need to build a culture that encourages nonconformant thinking and where individuals are not afraid of making mistakes. Firms may hire brilliant minds and top talent from the best business schools and universities, but if they eventually try to fit them into the existing culture and accepted ways of working, they are not going to get the results they desire. Cognitive diversity becomes key.

"Throughout my career, I’ve learned that the best ideas, solutions and customer understanding is achieved through the diversity of thought. It is critical to have a diverse team in order to achieve diverse perspectives. Diversity can come from so many different areas and through different experiences. For example, I had the opportunity to live and work in China for 18 months. Being immersed in a different culture made me realize that we bring so many unique perspectives to the table that benefits the work that we do. However, it is important to keep in mind that under it all, employees want to have meaningful work, to feel safe, to be able to provide for their families and to be heard and valued in the workplace."

- Laurie A. Ranegar, SVP Operations, CNA

3. Digital Diversity

The insurance industry is going through a digital transformation. Whether it is our vision of success, consumer demands, technology change or the way we operate, there is an undeterred pace of change. EXL and Harvard Business Review conducted a joint study across 800+ executives about their digital priorities — enhancing customer value and improving efficiency were the top two priorities. However there is a big gap between expectations and outcomes. Fewer than 30% of insurers reported achieving breakthrough outcomes from their digital initiatives. The missing piece is what we call digital intelligence, the all-important combination of digital and domain knowledge, human and technology, coming together to create breakthrough results — getting this combination right is key.

There are many digital levers available today. Automation, in general, has been in place for a long time. Software robotics or robotic process automation is now gradually picking up in the industry, with bots doing some of the repetitive, heavy lifting for the human workforce. However the potential of more advanced digital solutions with AI or cognitive abilities still remains largely untapped. Only 18% of insurers reported achieving significant outcomes with AI, according to a study from EXL and HBR focused on AI. Getting the right talent to orchestrate this diverse set of technologies is equally critical, with nearly half of insurers saying they struggle with finding talent to build AI systems or work alongside it.

Talent today is very different from what it used to be. The skills and job types today are evolving. In order to embed digital in their workforce, firms need to consider two aspects:

  1. Deploying their digital workforce i.e. the suite of digital solutions that augment their people
  2. Reskilling their people to orchestrate and co-exist with the digital workforce

Every firm wants to deploy a digital workforce. It is efficient and accurate. It seldom gets bored. It doesn’t take sick days. It can be quickly upsized and above all, doesn’t mind should there be a downsizing need to manage costs eg: amidst COVID-like disruptions. Benefits of using a digital workforce go far beyond efficiency and cost savings. Digital can also help enhance firms’ overall operational resilience and enhance customer experience.

Staff reskilling is equally important, if not more. Even as International Data Corporation estimates that worldwide spending on digital transformation will reach $2.3 trillion in 2023, a report from Gartner shows that 70% of employees have not mastered the necessary new skills. Our own studies show that 66% of insurers disagreed that reskilling programs were sufficient and nearly 60% said they lacked strong enough training programs to work alongside AI.

Firms may follow our 3R strategy to empower their human workforce:

  • Re-think: Revise job descriptions to align and accommodate new digital processes
  • Re-skill: Equip employees with the new skills required in their enhanced roles through training and certifications
  • Re-deploy: Move employees to departments most suitable for their skills

A high performance hybrid team is the winning formula. As with any change however, there will be fear, uncertainty and doubt. There’s already a widespread myth that AI will take away human jobs. Culture and communication plays a vital role here. Simply explaining to the staff why digital is critical, what the future state looks like, how they will be impacted and how they can adapt to create more value for themselves and for the organisation, will go a long way.

The right balance between man and machine will help firms better achieve business outcomes and leverage the opportunities presented by a flywheel effect of constant, iterative innovation. As they say, secure the present and design for the future!

"Diversity and inclusion continue to become of paramount importance for all financial services organisation, in particular those with aspiration of creativity and innovation. Understanding and harvesting the full value of diversity will springboard firms to a more aligned strategy, higher quality workforce and a more collaborative culture. To consistently deliver the correct outcomes, needs a mix of insights, gathered from people with an individual outlook, upbringing and passion to succeed."

- Harj Johal, Director of Customer Operation & Conduct, Direct Line Group

4. Geographic Diversity

Geographic diversity comes in two forms — workforce and operations. When it comes to workforce, location diversity is a key consideration for firms in today’s disruption-prone business landscape.

With the ongoing COVID crisis, businesses around the world have been relying on work-from-home arrangements. There are already indications this will to some degree become part of operating models permanently or at least for a foreseeable future. Eventually, there will need to be a shift from work-from-home to work-from-anywhere. This will require firms to build in geographic and locational diversity in their workforce by equipping them with adequate infrastructure comprising remote connectivity software and videoconferencing, amongst others.

Geographically dispersed teams, comprised of both staff and supplier personnel, will enable firms to carry out business with less risk of interruption. Firms should however embed inclusion into remote-work protocols to take advantage of the staffing advantages this model presents. Simple examples could include flexible working hours to those with child care responsibilities or not mandating video meetings for those with weaker internet connections.

Another element of geographic diversity that firms should consider is diversification of operations. Many insurance firms still have their core operations concentrated locally, such as within the UK, Europe, or North America. Geographical diversification is important, not only to protect against future pandemics. This approach helps insurers to spread loss exposures and align to macro and micro environment factors such as geopolitical risk and climate change. Regarding climate change specifically, firms need to consider a well-crafted strategy of spreading their operations between northern and southern hemispheres.

One of the ways insurance firms can effectively achieve geographic diversity of operations and at the same time leverage a whole spectrum of benefits is through global sourcing, or more precisely rightshoring (including captives and joint ventures). Today firms are spoiled for choice when it comes to outsourcing destinations - between Asia (such as India, Philippines), Eastern Europe, South Africa or Latin America, there are a range of options offering tremendous cost benefit advantages and language preferences, in addition to access to cutting edge innovation and digital talent. At the same time, effective management of risk associated with a captive or a joint venture is important. There are ample publications available, for example the International Risk Management Institute (IRMI) in the US provides extensive guidance in their publication Captives and the Management of Risk.

Adequate geographical or locational diversity in workforce and operations will help firms better execute current business operations and prepare for future disruptions, not only from meeting tighter regulation on resilience, but also to foster business growth and gain competitive advantage.

5. Supplier Diversity

Diversity goes beyond where the workplace is and who is staffing it. Diversity in sourcing and supply chain is another critical aspect firms need to consider.

Today’s dynamic and interconnected insurance business landscape has led to complex supply chains spanning across continents. Many different parties such as brokers, carriers, TPAs and delegated authorities, supported by shared services providers such as IT/business outsourcing, cloud hosting, facilities and goods providers, form an intricate business ecosystem.

A significant disruption, outage or failure by any party within the supply chain can cause significant harm to the firm and its customers. As disruptions are almost inevitable in today’s global threat landscape, diversification of suppliers becomes paramount. Diversity of geography within a supplier is equally important.

Firms should first define the objectives of diversity. The benefits that firms can yield from supplier diversity are many-fold including: access to innovative products and services, opportunity to negotiate rates, gain entry into new market segments, enhance resilience, and meet regulatory requirements, among others.

"The best defense against uncertainty and volatility will always be diversification, but diversity can also be a proactive step towards better resiliency. Only diverse minds can navigate the unexpected and come out ahead. The right path forward is often visible only after all the alternative incorrect options are evaluated and ruled out."

- Rohit Kapoor, Vice Chairman and CEO, EXL

Take for example global services and outsourcing. In the insurance industry both technology and business process outsourcing is prevalent. Claims processing, policy servicing, customer service and IT operations are heavily outsourced by firms to commercially attractive locations across the globe. In addition to cost advantage, firms can benefit from faster time to market, cutting edge innovation, domain and digital talent and better customer engagement.

Increasing reliance on a single outsourcing service provider (OSP) however can create a concentration risk. This has prompted many firms to move away from a single-vendor to a dual-vendor strategy or even setting joint ventures.

Supplier diversity is clearly being put into practice. Procurement plays a key role in operationalising the supplier strategy and implementing the right operating model for supplier diversification. Supplier diversity is also at the forefront of the regulatory agenda. In the UK, the Financial Conduct Authority (FCA), the Prudential Regulatory Authority (PRA) along with the Bank of England in their recent joint consultation paper P30/19 clearly emphasise the need for supplier diversity for insurance firms, especially highlighting concentration risk (overdependence on a single supplier) and vendor lock-in (costly exit) as two key challenges to watch out for. Similarly, in their Prudential Standard CPS 234, the Australian Prudential Regulatory Authority (APRA) has highlighted risks posed by third parties.

At the same time, a multi-supplier strategy is not a magic bullet for resilience. In some cases, one large and stable supplier may be better able to navigate operational disruptions (e.g. cyber-attack) than multiple small points of failure. Similarly, cost savings should not be the prime or only consideration when finding or selecting the right supplier or outsourcing provider. Instead, firms should assess sourcing strategies across multiple dimensions:

  • Macro environmental aspects such as demographic factors, economic factors (e.g. GDP, inflation, import duty rate and sales tax/ VAT, unemployment etc.), socio-cultural factors (e.g. society’s values), ecological factors (e.g. pollution levels) etc.
  • Micro environmental aspects such as competitive landscape, customer preferences, type of products/ services, degree of innovation etc.

Also it is important for firms to define a clear strategy for entering into a supplier relationship (“entry strategy”) such as performing detailed and multi-faceted due diligence (financial viability, information security, data privacy, business continuity etc.) on potential suppliers prior to onboarding. Similarly, firms should define a clear exit strategy i.e. having adequate legal safeguards such as contract wordings for when the firm wants to terminate the supplier relationship in the future without adverse cost implications or disruption to service.

Having the right entry and exit strategy and doing a careful selection of the right supplier(s) will go a long way.

COVID-19 is already highlighting the widespread uncertainties caused by supply chain and the reactive approach that firms usually take towards them. The World Health Organisation is warning that there may be a “second or third wave” of the coronavirus prior to a vaccine being available. Insurers should take learnings from this and ensure they are better prepared for future disruptions, while looking for opportunities to generate growth along the way. Effective diversification of outsourcing and thirdparty suppliers will be a great start.


Social diversity is increasingly becoming recognized in importance. It is now incumbent upon the insurance industry to begin effectively applying it in practice. There have been some steps taken on the social diversity and inclusion front, with many global and regional initiatives driving the change. However, there are still obstacles to overcome. For instance, the insurance industry remains the weakest of the financial sectors in terms of its attractiveness to women, as per a Randstad report on diversity and inclusion within financial services. Insurance firms must continue to embrace social diversity by setting clear targets across all metrics, and establishing mechanisms and practices to measure, monitor, and report on progress.

Cognitive diversity is also picking up in insurance industry in terms of popularity and the realization of its value. In today’s dynamic business landscape avoiding the blind spots caused by ‘echo chambers’ will be critical if firms are going to beat the competition.

However, when it comes to digital, geographic, or supplier diversity, the industry has a lot of catching up to do. The promise of digital remains unfulfilled. Although there is a tremendous potential for digital transformation across the insurance value chain, firms have barely touched the surface. This is especially true for more complex technologies, such as AI, that have been difficult to implement and scale. With other industries delivering transformed digital services to customers, the Insurance world will see increased demand from customers to ‘catch up’.

The approach to diversity of geography and suppliers for insurers has mainly been risk or resilience driven rather than as a growth enabler. Firms are slowly but surely recognizing the genuine business benefits of diversity.

As firms broaden their definition of diversity, they should also measure and monitor it using both quantitative and quantitative metrics.

Firms that embed the widest possible definition of diversity in their DNA will be better able to serve their customers, business partners and broader humanity, navigate challenges that future holds, and win in their markets. Social diversity continues to be extremely vital for a modern enterprise, and will be the single most important driving factor in coming years. As firms embrace social diversity, they should also consider other four vectors. A comprehensive understanding, appreciation, and application of all five vectors of diversity will indeed be a hallmark of a truly successful company.


  13. of-uk-boards-the-parker-review
  16. Rebel Ideas by Matthew Syed


EXL was named Leader and Star Performer in the “Everest Group PEAK Matrix® for P&C Insurance BPO 2020,” which positioned EXL in the top-most spot for Market Impact.

Contact us to know how we are helping insurance carriers and brokers on their transformation journeys, leveraging our deep domain expertise, advanced digital solutions, global delivery centers and approach for the future.



Raghav Jaggi
Global Insurance F&A Leader
and Co-Head P&C Insurance

Mohit Manchanda
Head of Insurance, UK & EU


Prakhar Agrawal
Practice Director, Governance,
Risk and Compliance, UK & EU



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