Find your perfect auto policy
Your information is secure
The Black Lives Matter movement has pushed racial inequality firmly into the public eye in 2020. The gap in wealth between Black Americans and White Americans is far from a new topic, but rarely has it elicited as much media scrutiny and social discussion as it is currently receiving. A bigger onus is being placed on support for black-owned businesses as a whole, but how about black-owned insurance companies specifically?
The following article will discuss black-owned insurance companies, their rise and fall, and the social impact that this had had. Many of the opinions and commentary are courtesy of Robert Weems, Professor of Business History at Wichita State University.
A Brief History of Black-Owned Insurance Companies
The first black-owned insurance companies started up in a much more segregated and hostile business landscape for black would-be business owners. Black-owned insurance companies survived by finding niches according to Professor Weems. Weems claims that African American insurance companies were largely able to exist through the Great Depression due to these niches.
As a result of improving social conditions, large insurance companies began re-evaluating their discriminatory treatment of African Americans. These market-leading insurance companies began to target the African American demographic, which inadvertently led to a reduced market share for black-owned insurance companies. Industry giants of the insurance world had a bigger pull, partially due to the fact they were offering their previously exclusive services to black Americans.
Another major factor in the decline of black-owned insurance companies was the head-hunting that occurred. The aforementioned leadinginsurance companies would recruit black employees from black-owned businesses specifically to sell to African Americans. Professor Weems believes that these practices not only led to the decline of black-owned insurance companies but also profited previously discriminatory white-owned businesses.
The Impact of the Decline of Black-Owned Insurance Companies
The events and practices outlined above occurred in many different industries, and the effects can still be felt today. Black-owned insurance companies were hugely successful and their demise (coupled with other similar declines across different industries) had a far-reaching impact on the overall wealth of African Americans.
Insurance companies need to disperse surplus. In the cases of black-owned insurance companies, the surpluses were often dispersed into the African American community. This trickle-down effect was cut-off by the developments in the industry and the decline of black-owned businesses. Weems argues that it is no coincidence that their demise has coincided with a deterioration of infrastructure in black communities across the US.
What Does the Future of the Insurance SectorHold for Black-Owned Businesses?
Predicting any form of business or social landscape is nigh on impossible, yet there can still be hope for the future. According to Weems, African American businesses often do not get access to the Paycheck Protection Program (PPP) which helps small businesses stay afloat. The PPP is a crucial program that aids the growth of small enterprises and without it, companies become vulnerable.
Weems hopes that a black business community can be established in the coming years to help combat the pressures of starting from the ground up. This would be a big step in allowing black-business to grow and thrive, particularly in the current uncertain and difficult fiscal climate.