NY DFS Imposes New Diversity Standards for NY Insurers

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On March 16, New York State Superintendent of Financial Services Linda Lacewell announced the issuance of Insurance Circular Letter 2021-5, on diversity (also referred to as “diversity, equity and inclusion” or DEI) and corporate governance. Under the letter:

  • The Department of Financial Services (DFS) expects New York-regulated insurers to make the diversity of their leadership a business priority and a key element of their corporate governance, treating diversity like other strategic priorities. Beginning in 2022, questions relating to an insurer’s diversity-related efforts will be included in DFS’ examination process.
  • The best way for DFS to support the insurance industry’s diversity efforts is by collecting and publishing data relating to the diversity of corporate boards and management.
  • An insurer should strive to have a board and management team that benefits from the broadest diversity of skills, experiences and perspectives possible, including those based on a person’s gender, race or ethnicity. Each company should assess where it stands on these measures as well as “where it wants to go and how it will get there, taking into consideration its size and other relevant factors, with a focus on improvement over time.”
  • DFS will collect data from New York domestic and foreign insurers with more than $100 million in annual New York premiums relating to the gender, racial and ethnic composition of their boards and management as of Dec. 31, 2019 and 2020, including information about board tenure and key board and senior management roles.
  • DFS expects to collect this data over the summer and publish results in the fall. Insurers are “strongly encouraged” to disclose publicly the diversity composition of their boards and management. DFS may continue this kind of information-gathering into the future.
  • DFS will organize a webinar focused on diversity best practices and address specific issues that companies have encountered in their diversity efforts.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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