With the state preparing to host an annual diversity conference, business and government insiders consider the question:
When the California insurance industry gives, are Black communities the beneficiaries?
Sacramento, CA -- On the eve of an annual diversity summit hosted by the California Department of Insurance, the insurance industry itself is taking careful stock of its little-noticed impact on African-American communities across the state.
In a report released earlier this year, the industry's increased profile in the African-American community was initially detailed in a report earlier this year, entitled "The Insurance Industry's Impact on California's Economy."
The 26-page study looked at a number of topics, focused on how the industry provides employment; contributes to California's infrastructure; helps builds communities with through procurement diversity; and conducts outreach through close ties to charitable nonprofit organizations.
According to the report, Californians bought life insurance coverage worth $332 billion in 2011, paid $14.5 billion in life insurance premiums and $30.5 billion in annuity considerations, while insurers paid out $7.4 billion in death benefits and another $8.4 billion in annuity payments.
Furthermore, it also noted that insurers held $46 billion in California municipal bonds at the end of 2011 and $19 billion in qualified investments through the California Organized Investment Network (COIN). In terms of jobs, the industry employed over 210,000 people with an annual payroll of $14.9 billion.
The Second Annual Insurance Diversity Policy Summit, which will present an "Insurer Supplier Diversity Survey," featuring reviews and forecasts on industry activity, takes place Nov. 1 from 8 a.m. to noon, at the Department of Health Care Services, East End Complex-Auditorium, 1500 Capitol Avenue, Sacramento.
Insurance Commissioner Dave Jones and the Insurance Diversity Task Force will lead proceedings and its findings should be a major source of buzz for industry titans like State Farm, Farmers, AIG, Kaiser Permanente and Prudential, all of which may be represented at the summit.
"Insurance is vital to economic development. It takes insurance to drive a car, buy a home, start a business or hire an employee," said Mark Sektnan, president of the Association of California Insurance Companies.
Furthermore, Sektnan drove home how the state benefits from industry investment. He added: "The investment by insurers into municipal bonds makes it possible to build roads, schools bridges and many critical community improvement projects. Many Californians benefit through more available jobs, better communities and redeveloped neighborhoods."
Of course, from a general point of view given California's climate and weather patterns, property/casualty insurance companies maintain reserves and surplus to cover both standard and catastrophic losses. The 1994 Northridge earthquake was the most costly one in U.S. history and the fourth most expensive ever, with insurance claims of $23.9 billion in 2012 dollars. Furthermore, the state is home to seven out of the 10 costliest earthquakes and eight out of the 10 costliest wildfires.
Meanwhile, the survey noted targeted efforts from the industry to impact underserved communities. For instance, Impact Community Capital (IMPACT) was established by leading insurance companies to build affordable multifamily housing, healthcare, childcare and community facilities and help assist in the growth of small businesses. IMPACT's 10,000 affordable housing units include Seasons at Compton, a multifamily project that consists of 84 one- and two-bedroom units, which are restricted to seniors and 32 of these units are designated for developmentally disabled seniors and senior caregivers.
Outside of Sacramento, black business leaders are also taking a close look at the industry's contributions to the African-American community.
"I think the industry is a very good partner with our local communities," said Mike Stewart, who serves on the board of the Carson Chamber of Commerce. "I've been very impressed with Kaiser Permanente's work with local chambers. They just opened a new one thousand square foot facility in Carson. I know that State Farm is moving into our area and Allianz is doing a lot of annuities, which provides long-term care for our elderly."
Armen Ross, who this year was elected president of the Crenshaw Chamber of Commerce in historically black South Los Angeles, disagreed. "I don't think the industry is doing enough in our community," he said. "[For instance] we are still faced with restrictions when we want to get car insurance," he said. "When I moved from San Bernardino to the Crenshaw District my rate doubled and I recently experienced bought my grandson a car. He couldn't get insurance; he had to go with one of the smaller companies and he's paying over $2,000 a year for liability coverage."
However, Ross did commend the industry for its charitable giving to some of the more hig- profile nonprofits in the community, but urged them to do more. "There are many groups that do the same or even more defined work that are not aware of the grants that are out there. I think the industry could do a better job in getting the word out."