IUA backs ethnicity and disability pay gap reporting but flags confidentiality concerns

By Rebecca Delaney

June 12 - (The Insurer) - The International Underwriting Association (IUA) has voiced its support for UK government proposals to introduce mandatory ethnicity and disability pay gap reporting, although it warned of the need to ensure appropriate data privacy measures.

The UK government launched a consultation in March on the measures it proposes to include in the Equality (Race and Disability) Bill, which as it stands would require large firms with more than 250 employees to report differences in pay according to both ethnicity and disability.

IUA members said they welcome the move on the basis that mandatory reporting can provide valuable insights, highlight areas for improvement and prompt discussions on workplace culture.

The IUA added that companies cannot compel employees to disclose their ethnicity. Voluntary participation rates can be low, and disability data relies on employees self-reporting.

As a result, the IUA voiced concerns that individual salaries could become identifiable, with some members arguing that a threshold of 1,000 employees would be more appropriate than the proposed limit of 250.

"Our members appreciate that ethnicity pay gap reporting has an important role to play in promoting transparency and driving change," said Nafisah Hussain, senior public policy executive at the IUA.

"Privacy is also a vital consideration, especially when participation rates are low. Grouping data broadly may limit its usefulness but breaking it down could result in unintentionally identifying individuals. We believe that the government should also be seeking to look beyond numerical reporting to focus on career progression and talent movement within organisations."

QBE is among the insurers that currently publicly disclose ethnicity pay gap data, with the most recent figures in January showing a mean gap of 4.5% – its lowest level since the company began reviewing the data in 2021.

The median ethnicity gap continues to be negative (minus 7.3%), meaning that ethnically diverse colleagues show a higher median pay rate compared to white colleagues.

QBE noted that location is a key factor, with a larger percentage of ethnically diverse colleagues based in London, demonstrated by a lower median pay gap for those in London compared to other locations.

In February, Zurich UK published its socioeconomic pay gap data in what it described as a first for the UK insurance sector.

The median pay gap between UK employees from professional and lower socioeconomic backgrounds stood at minus 4.2%, which represents the difference in hourly rate of pay of the middle person in each group.