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Uncertain Business

Uncertain Business: Risk, Insurance, and the Limits of Knowledge

Richard V. Ericson
Aaron Doyle
Copyright Date: 2004
Pages: 335
  • Book Info
    Uncertain Business
    Book Description:

    We live in an age of increasing doubt about whether our institutions and technologies can provide security against risks, many of which they themselves have created.Uncertain Businessis an unprecedented inquiry into insurance industry practices and what they tell us about risks and uncertainties in contemporary society.

    The core of the book is ethnographic studies in distinct fields of insurance: premature death, disability, earthquake, and terrorism. These studies reveal that uncertainty pervades different fields of insurance, the very industry that is charged with transforming uncertainty into manageable risk. Scientific data on risk are variously absent, inadequate, controversial, contradictory, and ignored. Insurers impose meaning on uncertainty through non-scientific forms of knowledge that are intuitive, emotional, aesthetic, moral, and speculative. Nevertheless, the nature of uncertainty and the response to it varies substantially across the fields studied, showing how contemporary society is characterized by competing risk logics.

    Insurers' perceptions and decisions about uncertainty - with potential for windfall profits as well as catastrophic losses - create crises in insurance availability and provoke new forms of inequality and exclusion. Hence, while the insurance industry is a central bulwark against uncertainty, insurers also play a key role in fostering it.

    eISBN: 978-1-4426-8284-9
    Subjects: Sociology

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-2)
  4. 1 Risk, Insurance, and the Limits of Knowledge
    (pp. 3-45)

    In our previous book,Insurance as Governance(Ericson, Doyle, and Barry 2003), we demonstrated how the private insurance industry works with the state to spread the costs of risk and provide security. While the state has enormous legal power to spread risk and responsibility among different sectors of society, the insurance industry also has regulatory power. For example, through industry associations, it regulates insurance company practices; through the insurance contract, it regulates the insured. While the state has formidable military and police power, the insurance industry mobilizes private security systems. It forces policyholders to implement security measures intended to provide...

  5. 2 Uncertainties of Life: Embracing Risk, Prudence, and Investment
    (pp. 46-93)

    Life insurance appears as a paradigmatic institution of modernity. Relying upon actuarial science and probabilistic reasoning, it enables rational choice about provision for the future. Among various lines of insurance, it is viewed as exemplifying actuarialism at its finest, generating data about life expectancy (mortality) and health conditions (morbidity) of the population that facilitate accurate pricing of insurance policies and determination of required benefits. Against this backdrop, life insurance is marketed as offering greater certainty in face of the contingencies of life and unpredictability of death.

    Beneath the veneer of certainty, life insurance is a very uncertain business. As we...

  6. 3 Uncertainties of Disability: Spreading Risk, Solidarity, and Welfare
    (pp. 94-179)

    In this chapter we examine disabilities that arise from work and vehicle accidents and how they are dealt with by the insurance system. Our particular focus is the subjective nature of personal injury accident assessment and not simply the compensation of physical disabilities such as smashed limbs following an accident. As we shall see, personal injuries are often entirely subjective. Even when there is objective physical impairment, a strong subjective component shapes the ways in which insurance claims are managed and compensated.

    We demonstrate that moral risk problems are especially acute in this field because of the subjective nature of...

  7. 4 Uncertainties of Earthquakes: Absorbing Risk, Mitigation, and Infrastructure
    (pp. 180-211)

    The uncertainties of earthquakes pose a markedly different constellation of risk, responsibility, and response ability for the insurance industry. Fundamental conditions for insurance – ability to calculate the chances of the event occurring and the magnitude of the losses that may result – are extremely difficult to meet in underwriting earthquake coverage. The timing, location, and effects of earthquakes are unpredictable. Therefore, the only feasible approach is to try to absorb the impact of the risk.

    Earthquake risk can be absorbed in two ways. First, the physical infrastructure of the built environment can be strengthened to offset property damage and,...

  8. 5 Uncertainties of Terrorism: Pre-Empting Risk, Precaution, and Vigilance
    (pp. 212-283)

    In this chapter, we examine how the insurance industry addressed the terrorist attacks on 11 September 2001 (hereafter referred to as 9/11), especially the attack on the World Trade Center (WTC) in New York. These attacks not only led to catastrophic losses for the industry, but also precipitated radical changes to underwriting and loss prevention practices. The sharing of risk and responsibility among the insured, primary insurers, reinsurers, and governments was de-stabilized, as each party struggled to pass on its exposure to the uncertainties of terrorism. The ‘pass the exposure express’ among these parties was one of the most significant...

  9. 6 Uncertain Business
    (pp. 284-296)

    Risk society is also an uncertain society. In addition to the natural hazards that have always plagued human settlements, we must now contend with unintended and intended catastrophes that are products of modernity. The complex systems of science and technology are producers of new risks with catastrophic potential, such as accidents at nuclear energy and chemical plants. At the core of relentless economic development, these systems are also embedded in conflicts of civilizations and cultures. These conflicts too have catastrophic potential, as evidenced by the new terrorism and the warfare responses to it.

    Such apparently non-distributable risks are brought to...

  10. References
    (pp. 297-310)
  11. Index
    (pp. 311-332)