California is home to the largest insurance industry in the United States, pulling in annual revenue of approximately $257 Billion in premiums, and paying out over $90 Billion in annual claims and benefits. It also employs about 234,000 people across the state and pumps tens of billions into the state economy every year.
In 2012 insurance companies, operating in the state awarded 1,300 contracts worth $930 million to businesses owned by minorities. That number included women, disabled veterans, African Americans, Hispanics, Asians, and other ethnic minorities, and according to a California Department of Insurance (CDI) survey, African Americans headed 66 of those businesses.
To what extent those investments actually impacted African-American communities across the state in terms of jobs or economic development is unclear, but some say it definitely has not been enough.
“There are not a lot of opportunities for minorities in general and for African Americans in particular it’s even less,” said Aubrey Stone, California Black Chamber of Commerce President. “Ensuring that those opportunities can be realized is key.”
Next week, African-American businesspeople from across the Golden State with concerns like Stone’s may get a chance to voice them when the State Insurance Commissioner’s office hosts its fourth annual Diversity Summit November 4 at California State University-Sacramento. The summit will unveil the 2015 Insurer Supplier Diversity Survey results. The survey queried over 200 insurers about business deals done in the state in 2013 and 2014, their governing board composition and the diversity of their suppliers. The CDI has invited insurance companies, minority business owners and potential vendors to attend the day-long event.
“We are home to the most women-owned businesses in the country and home to one-fifth of the minority-owned businesses in the country,” said Melanie Ramil, chief of external affairs community programs of the California Department of Insurance.
In 2012, Gov. Jerry Brown signed AB 53 into law. The law requires each California admitted insurer, with premiums of $100 million or more, to submit a report to the CDI on its efforts to procure minority, women, and disabled veteran-owned business enterprises.
“To see success in the industry you have to build relationships, create networks and networking opportunities for diverse suppliers, as well as, the insurers looking to work with them,” Ramil said. “Getting insurers to the table and diverse suppliers in one spot. This will happen with the summit.”
Personal Insurance Federation Vice President Michael Gunning is optimistic. He expects the dollar amount of insurer and diverse vendor contracts to rise above $1.5 billion in this year’s survey.
He said companies such as All-State, State Farm and Liberty Mutual have organized vendor fairs for decades to bring diverse vendors into the insurance industry.
“I think the outreach is broad across all ethnic minorities,” Gunning added.
Stone’s outlook is more cautious. “The issues need to be discussed objectively,” says Stone. “Right now there is no communication. None whatsoever. Other than this thing the task force is doing. That is just done for one day, then they go back to business as usual.”
To encourage open and organic communication at this year’s summit, the CDI organized a networking event along with two matchmaking sessions providing space for informal interaction between insurance companies and vendors. Jones will also speak at a lunch event.
“This year, for the first time, we are going to have a business-to-business networking event for our diverse suppliers only,” says Ramil. “It is so valuable maybe they can go after a contract together. Maybe they procure services from each other.”
Ramil said the matchmaking sessions would be of real value to any business registering for it. She said the insurance commissioner has personally written letters to every CEO asking them to attend the matchmaking session and she and her team have also called the companies.
Stone said he does not believe the summit will resolve any of the most sticking issues.
“Everyone will come up and pat himself or herself on the back,” he said. “Everyone walks away feeling good about themselves, but the situation still exists.”
Stone says to really improve communication, the CDI should organize a minority-business-led panel to sit down with the insurers who do the least business with minority-owned businesses. This should be organized, he says, to hammer out a way to improve communication providing the contractors with a real shot to secure new business.
“It’s as simple as that, really,” he added.
Ramil hopes the information gleaned at the summit goes to every minority vendor in the state.
“I want every diverse supplier to know we are really opening the door for economic opportunity in an industry that may not have been as open to it,” says Ramil.