State Farm promised to direct $100 million in charitable contributions and community investments over the next five years toward support for minority communities, as the insurance industry grapples with social unrest over racial inequities.
The top property and casualty insurer in the U.S. said Thursday that the sum will support “a variety of community-focused projects, including small business support, funding for affordable housing programs and educational advancement programs.”
In unveiling the pledge, Victor Terry, chief diversity officer and vice president of public affairs at Bloomington, Illinois-based State Farm, noted the company’s “long history and commitment to social justice.”
“Today, we take our latest step in this important journey,” he said. “Doing nothing is unacceptable. Powerful solutions must be brought to the table, and we need a lot of people at the table, too.”
State Farm noted, for instance, that it has invested nearly $150 million in community development programs over 20 years through the Local Initiatives Support Corporation, including a $4 million grant and $10 million low-interest small-business loan pool meant to provide targeted support during the COVID-19 pandemic.
“This pledge is truly a continuation of our historical, nearly 100-year support of organizations that help to meet the most pressing needs of the communities where we live and work,” Terry said.
State Farm’s commitment echoes similar ones from other insurers this week.
And USAA, which provides insurance and financial services to U.S. military members, veterans and their families, said Monday that it committed $50 million to nonprofits over the next three years to help close education and job training, employment and income gaps that exist in communities of color and low-income military communities.
The U.S. insurance industry as a whole is also coming to terms with racial inequities in the broader sector.
The National Association of Insurance Commissioners said in July that it would assemble a new committee focused on race and insurance that by the end of 2020 will recommend ways for regulators and the industry to increase diversity and inclusion, including in hiring and business practices. That move followed criticism levied at the standard-setting and regulatory support agency that insurers have “consistently opposed proposals to address systemic bias and inherent racism in insurance.”
Nearly 80% of the 2.8 million people who work in insurance and related activities are white, according to the Bureau of Labor Statistics, while 12.4% are Black or African American, 6.2% are Asian and 11.4% are Hispanic or Latino.
Many financial institutions in other sectors have also responded to calls to address systemic racism since the May killing of George Floyd, a Black man, in Minneapolis policy custody.
Bank of America and Citigroup each promised to spend at least $1 billion in the coming years on initiatives to advance racial equities. The latter estimates that systemic racism has caused the loss of $16 trillion of gross domestic product over the last two decades.
And companies such as Wells Fargo, Truist Financial, Visa and U.S. Bancorp have moved to make internal changes by increasing minority representation among their senior ranks or tying executive pay to diversity hiring targets, for example.
Yet racial minorities are still underrepresented at the top levels of American financial firms, according to a September report from McKinsey & Company. The consulting firm found that people of color comprise 39% of entry-level positions but just 10% of C-level ones.