On July 13, 2023 thirteen State Attorneys General led by Tennessee and Kansas warned Fortune 100 CEOs not to create hiring practices on the basis of race. On June 29, 2023 the Supreme Court of the United States (SCOTUS) ruled against the legal precedent of Affirmative Action. The most recent rulings are operationally impossible to enforce in an economy rooted in people’s transacting of personal data for products and services. While leaders who are for and against the ruling debate the language of the law and the company’s ability to be more or less subjective with regard to human capital, the strategy seems to be clear from the conservative political ranks of America: discourage the hope of access to this economy. We’ll have to wait to see if the strategy works, but as a business person I’m more concerned with two things 1) which institutions will be targeted next, and 2) what the impact on Gross Domestic Product (GDP) will be.
I think that the empirical evidence of the American economy and the markets that it has influenced globally are a result of how we incentivize interactions between individuals. After all, GDP is based on a measure of transactions. The United States has been the best at creating incentives to invest in more transactions by more types of people, to in turn, grow the pot of economic value.
The numbers say that the demographics of America’s working-age adults are growingly diverse. On the heels of Pride Month where Gallup reports that 70% of Americans support Same-Sex Marriage, the SCOTUS has also ruled that businesses can refuse services to LGBTQ+ people, based on the owner's perception of a customer’s identity. Imagine “Straights Only” water fountains. Still, the numbers tell the story of how America’s economy is inherently progressive.
While American conservatives push back on the inclusion of people, the insurance industry is actively incentivizing more inclusion, because it is costing the S&P 500 too much money not to be inclusive. Did you know that the S&P claims that 90% of their balance sheets are intangible assets? That is finance language for, people. All of those people who make up 90% of the world’s balance sheets are insured. Large multinational carriers and brokerages like Zurich, LLOYD’s, and Lockton are using the newly published ISO-30415:2021 Standard for Diversity & Inclusion to vet an organization’s maturity in people management, across all industries. It is necessary to understand that in our industry we see more than $10 Billion of claims annually and they go both ways. From the Black women suing Equinox for over $11 Million worth of harassment to White men suing Starbucks for over $24 million of discrimination, it costs money to argue with firms that aren’t standardizing and professionalizing the intentionality of inclusion. We see this litigation or threat thereof daily, and it is getting worse. The average price tag of settling out of court is about $75,000 per lawsuit. Court-awarded damages for employment-related lawsuits average about $217,000 per claim, per brokerage databases like ours at InclusionScore.
Regarding brokerages, a few weeks ago I spoke at the Independent Insurance Agents & Brokers of America (The Big I) Legislative Conference in DC, a day before the now controversial breakfast speech by Jesse Waters of FOX News as he mocked Vice President Kamal Harris’s gender and intelligence. I watched the gasps and eye roles as he sat on stage with The Big I’s outgoing CEO. This was about an hour or two before we all prepared for the next event, the Diversity luncheon. As a dozen of the largest insurance companies in the world wrote a letter to the lobbying org that they fund, Bob Rusbuldt’s duties were essentially tabled over those two hours, while waters was promoted at FOX News. These companies are managed by women and in the day prior they expressed to me their need and difficulty to retain talent from Millennials and Zoomers, more commonly referred to as the majority of America’s workforce.
Those same industry leaders are looking at US law enforcement via the Equal Employment Opportunity Commission (EEOC) and their reported 20% spike in discrimination charges in 2022 alone. That’s a potential 20% markup on $10 Billion market of employment practices liability insurance. To add fuel to the fire of enforcement, regulators like the National Labor Relations Board’s (NLRB) Top Cop asserts that all non-disparage agreements are “null & void”, freeing up all non-trade-secret information about workplace conduct, no matter how far back it goes. The EEOC is also enforcing rights for less notable protected classes of people via the Pregnant Workers Fairness Act and others. The supreme court can rule how it wants, but the on slot of awareness by people in the Western World born after 1981, people like me Beyonce, and Brittany Spears, is the real driving economic trend for intentional inclusion in the workplace, and the insurance industry cannot sustain paying for a disconnect between politicians and regulators who disagree on if we should integrate people into the normal economy.