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The Forms and Limits of Insurance Solidarity

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Abstract

What makes insurance special among risk technologies is the particular way in which it links solidarity and technical rationality. On one hand, within insurance practices ‘risk’ is always defined in technical terms. It is related to monetary measurement of value and to statistical probability calculated for a limited population. On the other hand, and at the same time, insurance has an inherent connection to solidarity. When taking out an insurance, one participates in the risk pool within which each member is reciprocally responsible for others’ risks. The combination of technical controllability and solidarity has made insurance a successful tool for governing welfare societies during the twentieth century. From the point of view of business ethics, it is interesting that, as we argue in this article, the connection between insurance and solidarity is not limited to social welfare assemblages, but is evident in relation to private insurance as well. At the same time, however, it is important to understand that insurance does not advance all forms of solidarity. Hence, this theoretical article analyzes the specific conceptions of solidarity that the different forms of insurance practice produce. Particular emphasis is put on the distinction between ‘chance solidarity’ and ‘subsidizing solidarity’. The main questions of the article are: What kinds of conceptions of solidarity are built in the insurance technology? And how are the limits of solidarity defined and justified in different forms of insurance?

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Notes

  1. For other histories of insurance and solidarity, and related statistical thinking, see Ericson and Doyle (2004, pp. 125–135), Hacking (1990), and Husted (1999).

  2. Interestingly, as also Rosanvallon (1999) has shown elsewhere, in Durkheim’s (1984) framework, ‘organic solidarity’ in a way continues the tradition of considering the ‘invisible hand’ as an organizing principle.

  3. For more discussion on the concept, see, for example, Spicker (1991), Bayertz (1999), and Stjernø (2004).

  4. It is noteworthy, however, that sometimes even in insurance solidarity, emotional bonds can act as justifications. Statutory social insurance is often linked to national solidarity or at least to mutual solidarity among the working population. Additionally, the promotional campaigns for private insurance have systematically appealed to moral responsibility and, especially in the earlier decades, also to the mutuality of the insurance community (Lehtonen and Liukko 2010). Similarly, as Bill Lesch (2011, personal communication) has pointed out to us, in the US, there are many groups requiring affiliation (American Association of Retired Persons, Lutheran Brotherhood, Masons, etc.) to benefit from their mutual, or, contracted insurance. So it may be that some—but certainly not all—forms of insurance require group identity to participate.

  5. From the point of view of general discussions concerning the concept of solidarity, it is interesting that May (1996), among others, does not include equality or justice among his criteria of solidarity.

  6. Of course, in practice, price setting can be more complex. In addition to actuarial risk calculations also various commercial, practical and public opinion related reasons might affect the actual prices.

  7. It is worth mentioning that in this respect, the size of the market matters. Within the EU, the life insurance business is still divided according to national markets. As Finland constitutes a rather limited market, it has not allowed for as advanced forms of segmentation and risk categorization of clients as has been the case in larger markets (Ollikainen 2004, p. 97).

  8. In Finland, such suggestions have been put forth by the former Prime minister Esko Aho, in Helsingin Sanomat (14 September 2005), and a leading lobbyist for big industry, Johannes Koroma, in Talouselämä (4 April 2008).

  9. On the many forms of redlining and the governmental means to react to it, see for instance, Eisenhauer (2002), Squires (1997), and Tootell (1996).

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Acknowledgments

We would like to thank the organisers and participants of the ‘Insurance, Ethics and Corporate Social Responsibility’ workshop (Munich, February 2011), especially Aaron Doyle, Johannes Brinkmann and Bill Lesch for their comments on an earlier version of our manuscript. In addition, we gratefully acknowledge the suggestions of anonymous reviewers of the journal, as well as those of Paavo Pitkänen, the members of The Mole Research Group and the members of the Managing Insecurity project in Helsinki. The study was funded by the Helsinki Collegium for Advanced Studies and the Academy of Finland (decision numbers 129829 and 128334).

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Correspondence to Turo-Kimmo Lehtonen.

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Lehtonen, TK., Liukko, J. The Forms and Limits of Insurance Solidarity. J Bus Ethics 103 (Suppl 1), 33–44 (2011). https://doi.org/10.1007/s10551-012-1221-x

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