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Producing Solidarity, Inequality and Exclusion Through Insurance

Abstract

The article presents two main arguments. First, we claim that in contemporary societies, insurance enacts peculiar kinds of solidarities as well as inequality and exclusion. Especially important in this respect are life, health, disability and old age pension insurance, both in compulsory and voluntary forms. Second, the article maintains that the ideas of solidarity, inequality and exclusion are transformed by the machinery of insurance. In other words, the concrete ways in which insurance relations are practically arranged have an effect on the ways in which the related moral and political concepts are perceived. We elaborate on three different forms of insurance solidarity, which we call chance, risk and income solidarity. The existence of multiple forms of solidarity relevant to insurance is significant because practices of insurance require decisions concerning what kind of solidarity is emphasised, when it is emphasised, and on what grounds. Moreover, what is solidarity for some can entail exclusion and inequality for others. Showing these internal tensions within insurance practice underlines the inherently political and moral nature of insurance.

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Notes

  1. This was the case in some of the first forms of commercial (marine) insurance. An affluent banker or ‘insurer' lent money for traders with high interest rates and promised to compensate the losses from his own assets, in case of misfortune.

  2. The term risk pool can have several meanings. Sometimes it is used narrowly to emphasise the pooling of similar risks so that a wider insurance collective can include several risk pools with distinct risk profiles. Other times, the term is used in joint arrangements where several insurance companies have decided to share the costs of especially rare and costly risks, such as natural catastrophes. In this article, we use the concepts of insurance pool and risk pool broadly, referring just to the basic idea of risk sharing inherent in all insurance.

  3. Of course, this general statement can be somewhat qualified by noting that in many cases, policy holders are not completely free of financial responsibility, as insurance policies may include different kinds of deductibles or co-payments for preventing overuse and moral hazard.

  4. This is not to say that sentimental bonds or shared values cannot play a role in insurance; historically, especially in the establishment of mutual insurance companies, they have been crucial.

  5. For a recent overview and discussion of the concept, from a philosophical point of view, see Landes (2014).

  6. It is noteworthy, however, that the concept of actuarial fairness does not imply positions taken on the question of whether risk levels are self-inflicted. The question of responsibility is completely transformed when it is related to individual, voluntary action.

  7. However, as Beveridge (1942, p. 13) noted, ‘[t]hough the State, in conducting compulsory insurance, is not under the necessity of varying the premium according to the risk, it may decide as a matter of policy to do so'.

  8. Good overviews of the moral hazard and insurance literature are given by Baker (1996), Lesch and Baker (2013) and Stone (2002).

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Acknowledgments

We would like to thank Xavier Landes for his comments and suggestions, which greatly improved the paper. The study was funded by the Helsinki Collegium for Advanced Studies, University of Helsinki, and the Academy of Finland (Decision No. 28344).

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Correspondence to Turo-Kimmo Lehtonen.

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Lehtonen, TK., Liukko, J. Producing Solidarity, Inequality and Exclusion Through Insurance. Res Publica 21, 155–169 (2015). https://doi.org/10.1007/s11158-015-9270-5

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Keywords

  • Insurance
  • Solidarity
  • Risk
  • Inequality
  • Exclusion