Five workstreams to address NAIC’s Special Committee on Race and Insurance charges

The National Association of Insurance Commissioners (NAIC) Special (EX) Committee on Race and Insurance met on April 12, 2021, to review its proposed 2021 charges, hear comments from interested parties on those charges and receive status reports on five workstreams.

Key takeaways

The 2021 proposed charges address the following:

  • Serving as the NAIC’s coordinating body on insurance related to diversity, equity and inclusion (DE&I)
  • Coordinating with existing groups such as the Big Data and Artificial Intelligence (AI) and Casualty Actuarial and Statistical Task Force with a focus on predictive modeling, AI and how race is impacted
  • Five workstreams and associated charges and goals:
  1. Recommendations and action steps to improve diversity in the industry
  2. Updates on DE&I efforts within the NAIC and regulatory community
  3. Examination of practices or barriers in the insurance sector that could potentially disadvantage people of color and/or historically underrepresented groups.


The committee considered comment letters from interested parties on the 2021 proposed charges; comments included:

  • Commitment to work with the NAIC on the shared goals and provide ongoing assistance in issues surrounding the appropriateness of data and assumptions used in the U.S. actuarial practice.
  • Observation that the core purpose of the insurance industry is to provide sustainable risk transfer and risk mitigation solutions for customers at a price commensurate with actual or expected losses, ensuring an equitable cost to each consumer. Two omissions from preliminary 2021 draft charges of the committee were identified:
    1. Reference to researching and analyzing underlying cost drivers and how the industry can assist in addressing the issues.
    2. Issue of economic empowerment referenced more strongly.
  • Collaboration between insurance companies, legislators, state insurance regulators, and consumer representatives to find the right balance of cost-based pricing and equity and fairness in terms of rates
  • Consideration of correlation versus causation as actuarial standards on the use of risk classification factors do not require consideration of causation
  • Improvement of the charges for clarity, coordination, reducing overlapping activities, and most importantly, incorporating a more systematic approach to the issues
  • Recommendation to streamline the many Special Committee workstreams into one working group for the DE&I efforts and the remaining activities either at the Special Committee level or in a Special Committee Legal and Regulatory Guidance working group combined with assignments to other NAIC committees
There are five workstreams outlined below that are being used to address Special (EX) Committee on Race and Insurance charges, all including recent updates and action items prior to April 12, 2021.
  1. Research/analyze level of diversity and inclusion within and access to the insurance industry and insurance products. Make recommendations on action steps.
    In recent updates, the amended charge should now be solely focused on industry vs. products to ensure it does not overlap with later sectors. The board’s role, challenges in diversifying leadership, and metrics used by the industry are also among the changes. New recommendations have been established on being able to expand definitions of diversity, visibility of entry level talent and improving apprenticeship programs.
  2. Research/analyze the level of diversity and inclusion within the NAIC and state insurance regulatory community. Make recommendations on action steps.
    The first update in this workstream is the decision to divide into two groups: one to address state departments, and the other to address the NAIC. There have been further discussions on state vs. department level initiatives, variances in reporting on statistical information, and a better way to gather information and learn from each state. A lot of headway has been made on initiatives, including the development of a best practice survey to help develop these initiatives, as well as the NAIC establishing a Diversity, Equity, and Inclusion Council with an extensive list of initiatives already underway.
Workstreams three through five are of upmost importance and all focus on examining and determining which practices or barriers exist in the insurance sector that could potentially disadvantage people of color and/or historically underrepresented groups in the following lines of business:

3. P&C
This workstream has made headway in first developing a list of issues, as well as seeking out comments and feedback from interested parties. These comments were then sorted into different categories including affordability and availability of insurance, access, unfair discrimination and use of data, and producer issues. With these lists and categories, next steps include prioritizing and creating recommendations and goals for the upcoming year.

4. Life and Annuity
Similarly, this workstream also developed a list of issues, with categories including access to life insurance products, disparities in underwriting/rating, and disparities in cancellation/recessions. In December, presentations were given to interested parties such as the NAIFA, American Academy of Actuaries, CEJ and ACLI. The focus of the presentations were on the representation of the African American community in financial advisors, actuarial standards on risk selection, use of data, pricing, assumptions and findings, and the importance of correlating factors vs. causative factors.

5. Health
The Health workstream is collecting and evaluating data to confirm the existence of issues within the industry, with a focus on affordability and accessibility. After hearing from various speakers, the recommended issues to address include a more robust network, adequacy requirements, provider workforce education and equity, enhanced outreach, and a lack of data collection related to sexual orientation and gender identity.

Baker Tilly will continue to monitor the Committee’s activities and understanding of how any changes impact insurers’ operations or financial reporting. Connect with our Value Architects to talk about your specific situation.

John Romano

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