[Begin prefatory hand waving/]
So I got this book from the library, Embracing Risk, edited by Tom Baker and Jonathan Simon. I haven’t had time to read it. I just read the introduction and it’s really good, like it’s going to be really useful to me in relation what I’m trying to think about regarding workmen’s compensation and so on. And since it’s going to be useful of course the damn thing is due back to the library. Curses.

Before I return the book (I’m already at $18 in library fines, what’s another couple bucks?) I’m going to post my notes on the intro, including references to the great deal of stuff cited that I should also look at. Among other things, there’s reference to a fair bit of Foucaultian stuff, all around the theme of governmentality (on that, because I always forget, the lecture on governmentality came in the lecture series Security, Territory, Population; the next year’s course I think was Birth of Biopolitics, which I think in the beginning summarizes the previous course; I thought I’d read S/T/P but I’m not sure now, I know I didn’t get far in BoP).

Before I dive in to my notes on the intro, though, I want to remind myself to come back to all these posts, and these two things to come back to as well for resources to help me get more of handle on all this.

I also want to note three other blog posts worth reading. There are two by Jodi on her recent readings of Foucault. These look to be the start of a series of many. I hope so, as Foucault just recently came back for me as someone I need to read seriously (damn it!), at least the parts of his work on govermentality. And there’s this post by Steve on biopolitics. Now then, notes on Embracing Risk.

[/End prefatory hand waving]

The book is about what the editors and contributors see as a relatively recent trend away from the distribution of the costs of risks and accidents in a way that minimizes the share of any particular individual (away from spreading risk). This has multiple components, including policy and cultural factors, which the editors summarize by saying that “as more of life is understood in terms of risk, taking risks increasingly becomes what one does with risk.” (1.) As implied in that quote, the book is also about a vocabulary or idiom or outlook where risk is a major term and concept. I’m not as interested in the first because my interests in reading the book are in older stuff rather than more recent stuff. I’m quite interested in the latter, in the hope that vocabulary will help me understand insurance and risk in earlier times.

In those earlier times the predominant orientation toward risk, according to the editors, was “risk spreading.” (2.) The scope of risk spreading was broad and changing, “as reformers sought to extend its logic from workplace accidents to automobile accidents, unemployment, poverty, diseases, and nearly every other social problem.” (2.) The authors identify workmen’s compensation as the start of an era of risk spreading, in which “ever-expanding public and private insurance pools assumed financial responsibility for significant risks faced by individuals, families, and organizations. On the private side, the twentieth century witnessed the dramatic growth of health insurance, tort liability insurance, workers compensation insurance, and private pensions (which typically have an annuity, and, hence, insurance character), as well as the slower but still steady rise in older forms of insurance such as life, property, and disability insurance. On the public side, there was the creation and perhaps even more dramatic expansion of an entirely new social insurance sector (…) as well as a host of public sector insurance ventures direct primarily at business risks.” (3.) One thought that struck me reading this is that while public and private are useful distinction, they shouldn’t be overemphasized (this is not a criticism of the editors but a reminder to myself about how to read their remarks); some of their own remarks about insurance and delegated state functions make this point. I’ve still not read the book but I’m told that Nancy Cott’s Public Vows makes this point about marriage and law (about what is and is not political)

Anyhow, during that era, which the editors see as running up until the late 1980s at the least, “insurance was widely understood as the art and science of spreading risks over populations.” (3.) The editors don’t say so in so many words, but implied here is that risk was de-individualized. Some pro-insurance voices claimed that through insurance “science would be able to resolve social conflicts and produce forms of collective mutuality.” (3.) The editors note that there were gaps in coverage, of course, but that this does not undermine the claim about the growth of insurance. I’m interested in those gaps, will have to come back to that.

The editors describe Social Security as “the most visible example of the “spreading risk” approach,” as a system which “spreads the risk of physical inability to work among almost the entire working population.” (5. I would argue that income caps on contributions mean that this population does not include the *employing* population.)

The editors take up a set of distinctions from Francois Ewald, distinctions I find helpful. These are “four aspects of insurance: institutions, forms, technologies, and visions.” (7.) Institutions are insurance-providing organizations such as government agencies and private companies. Forms are types and subtypes of insurances – life insurance (which includes whole and term life insurance), property insurance (including the forms of fire and flood insurance), etc. Insurance technologies are “procedures for dealing with risk. They are “the “how to” of insurance. Examples include the mortality tables, underwriting classifications, and inspection procedures of ordinary life insurance; the incentive-based medical provider contracts, retrospective review, and computerized claim processing procedures of managed health care companies; the payroll tax, disability schedules, and administrative review procedures of the social security program; and the standard-form insurance contracts used in almost all private insurance.” (8.) Insurance visions are the ideas, images, and ways of talking and thinking about insurance. Put differently, they’re the notions and gut level impulses or intuitions about what insurance should and shouldn’t be and do.

I found this helpful as way to think about this stuff. “An organization that self-insures with respect to a particular risk does not purchase insurance for that risk. Thus, (…) that organization has no insurance for that risk. Yet self-insurance differs from no insurance in that an organization that self-insures does not simply forgo buying insurance, it also adopts (at least in theory) a set of self-insurance procedures (…) similar to those an insurance company would apply – for example, keeping track of past losses and setting aside financial reserves to meet comparable losses in the future.” (8.)

The editors make the point that insurance as a risk management technology goes beyond the range of what is commonly understood as insurance. “Insurance institutions have developed many ways of managing risk that other people and institutions have adopted,” including in epidemiology, public health, safety testing, fire departments, and testing the efficacy of medical procedures. (8.)

Interesting anecdote from a book by Viviana Zelizer: “it was once commonly believed that life insurance was immoral, either because it represented a presumptuous interference with divine providence, because it was seen as a form of gambling, or because it impermissibly equated life and money. This vision of insurance (…) helped slow the growth of life insurance in at least France and the United States.” (9.)

Another interesting bit, from Tom Baker’s 1994 article: “Because the primary benefit of insurance is the sense of security that for most people is never tested by a catastrophic loss, the value of insurance rests, in an important sense, in the imagination. Courts have recognized the importance of imagination to insurance by placing great emphasis on the “reasonable expectation of the insured” and by holding that insurance advertising is relevant evidence for determining that expectation. In that advertising, insurance companies evoke a vision of insurance that differs from the vision of insurance they employ when denying claims. Their “sales” vision is the promise “to be there,” and it is dominated by narratives of family and the need to protect the individual against sudden misfortune. Their “claims” vision is a complicated amalgam of tough love and protecting the insurance fund, and it is dominated by narratives of institutional ethics and the need to protect ratepayers against fraud and abuse. As described by Baker, courts first decide which of these visions to employ in resolving insurance contract disputes. Who wins a dispute often depends as much on which vision the court adopts as on how the court applies that vision.” (9.)

This contrasts with “the actuarial vision of insurance” (9) where predictability is the main value, which won out over the values of mutual insurance associations. In the “embracing risk” vision, there is “[t]he idea that some amount of risk is good for people and that too much protection is harmful” (10), and idea that sounds pretty old to me.

A few other things….

“[P]residents and prime ministers alike now define themselves by the risks they would have the state lift from the shoulders of the population (criminal victimization, poverty in old age) and the risks they would not (poverty in childhood, economy security, health care).” (11.)

“[P]rivate insurance can be a crucial form of delegated state power. Rather than set its own criteria for access to vital economic freedoms like operating an automobile or a business (which would be controversial and even, perhaps, unconstitutional), the state mandates that a person wishing to engage in any such activity first obtain some form of insurance. Examples include liability insurance for automobile owners, workers compensation insurance for employers, and surety bonds for companies engaged in business with the state. In most cases, the state avoids providing the insurance and thereby asks the private market – typically property-casualty insurance companies – to set the underwriting criteria that will determine access to these privileges and immunities. Motivated by controlling losses they have contracted to pay, the companies set up their own norms of conduct, which they enforce by contract terms and pricing (and, ultimately, the state judicial system).” (13.)

One implied concept here is delegated sovereignty. I find that very helpful as a way to think about killing and incidental violence. This may be a way for me to find some use for Agamben’s stuff on exceptions and sovereigns in a way that doesn’t annoy me, in that the decision on the exception would involve in part the delegation of some piece of sovereignty.

The editors note that “insurance is a form of regulation,” one that extends into people’s homes and daily lives, “insuranceis one of the greatest sources of regulatory authority over private life.” (13.) The editors discuss this in part under the term moral hazard. “If not properly managed, insurance can reduce the incentive to be careful to avoid a loss and it can reduce the incentive to manage the cost of recovering from loss.” This leads to an understanding of “private insurance [though this is equally true of public insurance] as a form of social control.” The editors write that “control is the fulcrum for managing moral hazard. Losses over which the insured has no control do not present a moral hazard problem, because the reaction of the insured to being free from risk does not affect the odds of the loss. The less control the insured has over the loss, the more willing insurance companies are to sell insurance, and the more complete that insurance will be. Where the insurance has substantial control, however, the price for buying insurance often includes giving up a measure of that control. Insurance companies may demand that the insured institute safety procedures, undergo periodic inspections, or allow the insurance company to control the efforts taken to recover from loss. Examples include sprinkler requirements in commercial fire insurance contracts, inspection clauses in workers compensation insurance contracts, and hospitalization precertifciation clase s in health insurance contracts. When insurance companies manage moral hazard, they are regulating behavior, not simply spreading risk.” (15-16.) This should be understood in light of the editors points that they are “less interested in what is a risk than (…) in what is done in the name of risk” (18 and that “what is a risk differs across time and space, not according to an objective, scientific process, but rather according to the logic and influence of institutions.” (19.) So, it’s as much about perceptions of risk than actual risk.

And now the great may things cited there that I want to read, asterisk means it’s a higher priority.

*Tom Baker,
1994, “Constructing the Insurance Relationship” in Texas Law Review 72, 1395-1433.
1996, “On the Genealogy of Moral Hazard,” TLR 75: 237-92
2000, “Insuring Morality,” Economy and Society 29, 559-77.
Beck, Risk Society
Bernstein, Capital Ideas.
*Burchell et al, The Foucault Effect, especially Ewald’s essay there.
Edward Burger, Risk
Calabresi, The Cost of Accidents
Dawson, The Principles of Insurance Legislation
Ericson and Haggerty, Policing the Risk Society
Ewald, L’Etat Providence
*Hacking, The Taming of Chance
*Heimer, Reactive Risk and Rational Action: Managing Moral Hazard in Insurance Contracts
Kimball, Cases and Materials on Insurance Law
Krimky and Golding, Social Theories of Risk
Margolis, Dealing With Risk
*O’Malley, “Uncertain Subjects: Risks, Liberalism, and Contract,” in Economy and Society
Pal, “Relative Autonomy Revisited: The Origins of Canadian Unemployment Insurance,” in Canadian Journal of Political Science 19, 71-92
Perrow, Normal Accidents
Jonathan Simon –
*1988, “The Ideological Effects of Actuarial Practices” Law and Society Review 22, 771-800
1993, Poor Discipline
1994, “In the Place of the Parent,” Social and Legal Studies 3, 14-45
1998, “Driving Governmentality” Connecticut Insurance Law Journal 4, 521-88
Skocpol, Protecting Soldiers and Mothers
Smelser and Swedborg, The Handbook of Economic Sociology
Stenson and Watt, “Governmentality and ‘the Death of the Social’?”, Urban Studies 36, 189-201
*Stone, “Promises and Public Trust: Rethinking Insurance Law through Stories”, Texas Law Review 72, 1435-46
*Zelizer, Morals and Markets
*Zelizer, Pricing the Priceless Child