How IAIS advances DEI policies

As explained in an earlier blog post, the National Association of Insurance Commissioners (NAIC) has drifted away from its mission and is actively working to inject politics into the US insurance industry. We see this particularly with NAIC’s questionable advocacy for environmental, social, governance (ESG) policies, in addition to its diversity, equity, and inclusion (DEI) goals. This drift of focus has resulted in NAIC’s members overlooking actual problems in the insurance market for US customers, leaving many uninsured across various state markets like Florida and California.

Yet, despite its vast power and autonomy, NAIC is not acting alone in its political crusade. It merely serves as one cog in a broader international machine that is advancing the politicization of insurance market standards.

Enter the real culprit behind the ESG/DEI insurance agenda: the International Association of Insurance Supervisors (IAIS or Association).

Established in 1994, IAIS is an international association comprised of 152 members that operate across 200 jurisdictions worldwide. Their global reach captures 97 percent of all insurance premiums managed, with IAIS operating as the preeminent standard setter for insurance firms, commissioners, and customers.

IAIS’s primary purpose is to facilitate stable insurance markets that are fair and secure for policyholders. IAIS pursues this through active supervision of systemic risks and financial developments affecting global markets.

The Association’s standards and principles are regularly accepted by members, intending to reinforce the supervisory obligations of practitioners and appointed officers. As such, IAIS, like NAIC, operates on a supervisory basis. None of IAIS’s standards are binding and membership is voluntary.

While this appears fine on paper, the Association is simultaneously pursuing an ulterior political agenda. A notable contribution to this has been IAIS’s recent application paper on DEI.

DEI makes for bad policy primarily because it imposes discriminatory criteria for hiring and academic admissions. DEI policies afford greater leniency to preferred racial groups, tolerating mediocracy over meritocracy. In the IAIS paper, insurance managers are encouraged to use DEI standards of employee review, supplanting traditional workforce policies.

IAIS’s finalized paper on DEI was released last fall amid a sea change of US corporations axing their DEI programs. Even many universities have relinquished their DEI offices in the face of the Trump Department of Justice’s crackdown on race conscious job practices. Such engagements are likely perceived as illegal under Title VII of the Civil Right Act of 1964 and may also be considered as another form of discrimination following the precedent in SFFA v. Harvard (2023).

IAIS uses the paper as a propaganda tool, directing its private-sector members to adopt DEI policies. The impetus is that insurance companies that actively integrate DEI principles into their business models will see enhanced “prudential and consumer outcomes.”

IAIS directs insurance supervisors to look out for warning signs that an insurer needs to improve its corporate DEI policy. IAIS artificially inserts DEI into its existing risk management principles (ICP 7 and 8) outlined for its supervisory members.

IAIS also directs its members on how they should pursue DEI management strategies in a more effective way.

“The insurer should be focused on the practical application of DEI to achieve genuine enhancements, instead of taking a tick-box approach,” the paper reads. “Inability to demonstrate the application of DEI commitments and lack of purposeful follow-through on DEI pledges can be a telling warning sign, as can public disclosures that do not realistically reflect the situation.”

IAIS repeatedly urges its members to develop a framework that embeds DEI initiatives into its daily employment practices, evaluations, and employee accountability procedures. Perhaps the most alarming assertion by IAIS is how DEI can enhance the quality of insurance products and services.

Without citing any quantitative evidence, IAIS asserts that, “concerning the insurance sector, a real diversity of talent and realities in the workforce can lead to a much more comprehensive product offering that is far more tailored to consumers’ needs. Conversely, DEI-washing can lead to poorly defined insurance needs, leaving the consumer without suitable product options.”

Throughout the paper, DEI is framed as one of the pillars in IAIS’s Strategic Plan for 2022-2024. The application paper builds on its 2022 stocktake paper which illustrated what IAIS and other international NGOs were doing to pursue DEI across the insurance industry. The stocktake paper in turn reinforces the Association’s declaration of support for DEI in 2021, coinciding with the global shift toward DEI during the pandemic.

IAIS relies on industry-wide conformity when diffusing its policies across member firms and officials worldwide. The Association issues its paper with the expectation that its members will faithfully carry out the stated DEI practices across their own jurisdictions. Private insurers who refuse are at risk of having their membership stripped by IAIS, which can be detrimental for business.

NAIC presents a prime example of conformity. By incorporating IAIS’s messaging in its own DEI reports, NAIC strongarms its member firms to incorporate DEI standards. And, perhaps more damaging, NAIC has taken advantage of a trojan horse style of regulating the insurance industry. We see this in how NAIC executes all of its major policy decisions behind closed doors, working closely with state insurance officials to vote on proposals. Public viewership is prohibited to these regulator-only sessions. 

This obscure setup allows NAIC to channel IAIS’s DEI policies through state regulations, pressuring conformity across its member state commissioners. “Ultimately, NAIC, an opaquely run NGO, exerts significant influence on insurance laws and regulations without public oversight or awareness,” according to a recent Buckeye Institute report by Greg Lawson.

The public, particularly insurance customers, deserve to know more about the relationship between IAIS, NAIC, and state insurance officers. Following a pyramid setup, IAIS imposes arbitrary DEI principles through its writings, passes this onto its powerful members like NAIC, who use vast amounts of pressure to ensure its domestic partners adopt them into policy.

US lawmakers should consider legislation that would hold entities like NAIC and IAIS accountable for abusing their missions to pursue such political agendas. States like Texas are actively taking steps to do so, recognizing that insurers shouldn’t be subjected to a harmful agenda that is increasingly being rejected by courts and policymakers. Congress should begin raising the alarm on this unaccountable regulatory framework before domestic insurers are further undermined.