Agents of change
Are Black communities beneficiaries of insurance investments?
Akin Wally Smith | 10/31/2013, midnight
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.
The industry’s increased profile in the African American community was initially detailed in a report released earlier this year entitled “The Insurance Industry’s Impact on California’s Economy.”
The 26-page study looked at a number of topics including how the industry provides employment; contributes to California’s infrastructure; helps build communities 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 more than 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 Ave., Sacramento.
Insurance Commissioner Dave Jones and the Insurance Diversity Task Force will lead proceedings and the summit’s 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.
Further, Sektnan drove home how the state benefits from the industry’s investment. “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. Further, the state is home to seven out of the 10 costliest earthquakes and eight out of the 10 costliest wildfires.
Meanwhile, the report 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.
The 10,000 affordable housing units IMPACT has helped finance include Seasons at Compton, a multifamily project that consists of 84 one- and two-bedroom units, which are restricted to seniors; 32 of these units are designated for developmentally disabled seniors and senior caregivers.