Opening Lloyd’s closed ecosystem

Opening Lloyd’s closed ecosystem

Opening Lloyd’s closed ecosystem 1920 1280 Equity

A discussion with Mark Lomas FCIPD, Head of Culture @ Lloyd’s

Lloyd’s has set an ambition to boost ethnic diversity in the world’s oldest insurance market. It wants at least one of every three hires to be individuals from an ethnic background. Godwin Sosi, Co-Founder of ACIN, spoke about Lloyd’s ethnicity challenges and solutions with Mark Lomas, Lloyd’s recently appointed Head of Culture.

Q: Why has the Lloyd’s market introduced central ambitions for ethnic hiring?

A: To understand that, you need to understand the history of Lloyd’s. It’s more than 300 years old, and on the risk front it has moved with the times. From its origins as a marine insurance market, Lloyd’s went on to be the first, or one of the first insurers of motor cars and airplanes, then satellites, cyber protection and driverless vehicles. But on the culture front – Lloyd’s wasn’t as fast at changing with the times. We didn’t have our first female broker until 1972.

In 2019, following on from the Me Too movement, Lloyd’s received some negative media coverage about the market’s culture of sexual harassment and alcohol consumption. Together with our market stakeholders, we realised we needed to set new expectations. Lloyd’s responded with a concerted push to improve gender diversity in leadership positions, and introduced a ‘speaking up’ campaign to drive action. Then in 2020, when the Black Lives Matter movement placed focus on Lloyd’s historical involvement in the Transatlantic slave economy (through marine insurance), we took the step of apologising for our role in slavery – one of the first UK organisations to do so – and committed to taking steps to improve racial equality and opportunity today.

To do that we needed to understand the lived experience of Black people in our market. Lloyd’s set out to measure its diversity and explore its history, to research, reflect, and respond. Lloyd’s has now made commitments ranging from charitable donations and leadership development programmes, to its ambitious one in three hiring ambition to draw people from diverse communities into jobs at Lloyd’s. We will measure progress against the one in three hiring ambition through our market-wide Policies and Practices return.

Q: Why is all that important?

A: We are a global market built on relationships, including (for the most part) in the employee selection process. But we cannot afford to be complacent about how and where we look for talent, because diversity in our workforce directly helps us understand the insurance solutions of the future. We need to stay ahead of the times.

And to do that we need the best people – fast. Lloyd’s has been like a tightknit community historically – which is positive in some settings, but in others means key roles like actuarial and underwriting don’t see enough of a diverse talent pipeline. So we have a skills gap ahead. Diversity improves the perception and understanding of our industry among a wider group of potential future employees, and we cannot afford to overlook that talent. It also gives us a more representative understanding of our customers, so we can innovate for them. It’s good business.

Finally, we have an obligation and a responsibility to respond to Lloyd’s past. Our focus on ethnic minority talent today is a vital way of ensuring we recognise and live up to that responsibility.

Q: So that has driven the one-in-three ambition?

A: Partly. Overall, the market’s workforce diversity is aroudn 9% ethnic minority. But it’s very much lower in some specific occupations, and in leadership. Targets that influence hiring methodologies are the best way to move the dial effectively in a short time, to get to ten or twelve percent representation soon – and open up the market’s ecosystem for recruitment.

It means we need the support of organisations like ACIN, because some companies don’t know how to look for talent beyond their immediate networks. And it’s important to say that some firms in the market already hire at one in three, proving it can be achieved. The Corporation of Lloyd’s is at 31%, but in the market as a whole we’re at about 15%.

Q: Are enough people available to meet that ambition?

A: Yes – quoting an inadequate supply of diverse talent is a convenient, but untrue excuse. Insurance requires all kinds of skills: IT, HR, marketing… even underwriting has specialisms. True, some technical areas are more challenging than others. Our data shows that a more diverse pipeline of actuaries is coming through at university level, for example, but we probably cannot place a number of Chief Underwriting Officers from diverse communities in the next six months. We can hire a more diverse cohort into the market as underwriting assistants, though, and watch them rise. The skills and potential are out there, but we have to apply new thinking to open the ecosystem and attract new people.

Q: Don’t quotas sometimes block the best talent?

A: Quotas are unlawful! Positive discrimination is illegal in the UK. So Lloyd’s has introduced a form of positive action, rather than a quota. It encourages employers to look at how they do things, and change them to benefit from an improved system of recruitment. Targets work! We’ve proved it by changing the gender balance at Lloyd’s.

But we have to overcome old habits and attitudes. The belief that we currently operate in a perfect meritocracy is flawed. The desire to hire the best people is genuine, but the criteria used to judge candidates is often less to do with skills, ability and objective criteria than it should be. To get where we want to be, we need to evaluate talent based on skill and potential, not networks or confidence. We need to recruit differently to ensure we consider the people with the best skillsets, not those most readily available, or those who would be the ‘best fit’.

Finally, it’s important that this is about talent, not just corporate box-ticking. Our market has an ageing technical workforce. A couple of generations of young talent don’t see the insurance sector as particularly attractive, even inside the ecosystem. We need to do something about it, and our hiring ambition is one way to try and prevent the skill shortages developing for us that are currently impacting sectors like engineering. It is also a way to address our legacy in a positive and proactive manner, by getting diversity into the pipeline.

Q: We can hire the right people, but how do we make them into the specialists and leaders of the future?

A: Companies in the Lloyd’s market need to be honest about the need for informal development and network opportunities for ethnic minorities and other diverse groups. Individuals need the opportunity to go to a conference with the boss, or to dinner. The boss needs to put people into their network. They need to be honest and deliberate with sponsorship, mentoring, and reverse mentoring, using all the levers available to create a critical mass of self-sustaining diversity.

Q: What’s the outlook?

A: I am super optimistic. Lloyd’s companies see the benefits of diverse cultures – and I believe many are up for the challenge.

Mark Lomas
Head of culture