World Insurance. The Evolution of a Global Risk Network.



Since the end of the eighteenth century, the insurance industry has cast a safety net around the world, first in the British Isles and then further afield, irrespective of cultural, political and ideological divides. Unlike previous publications on insurance history, which tend to discuss the development of national markets or individual companies, this book focuses on the creation of networks across borders from the end of the eighteenth century to the present day. Distinguished international economic historians draw upon examples from twenty countries across the continents to demonstrate how what was called the 'British system' of risk management spread out in waves, and describes the forces that made this possible - first among them migration from Europe and international trade. The book explores the economic, political, religious, and cultural obstacles that blocked the path of this European invention - not only religious law and traditional practices, but above all protectionism, inflation, and political ideologies. It examines the process of transformation through which modern insurance supplanted traditional forms of protection against perils and risks and was able to keep on offering new ways of dealing with the risks of modern life. As well as discussing primary insurance, it also considers the role played by reinsurance, without which the losses arising out of today's natural and man-made disasters would be immeasurably greater. Finally, taking modern-day disaster scenarios as examples, the book shows just what the limits of insurability are and what risks worldwide networks entail.
... g. Alborn 2009;Borscheid and Haueter 2012;Van Leeuwen 2016). By focusing mostly on individual case studies, this literature, with a few exceptions of two-country (Kingston 2007) or large-n studies (Enz 2000), has not explicitly addressed the question of how and why insurance industries across different countries have come to look so dissimilar for such a long period. ...
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Contemporary capitalist societies use different institutions to manage economic risks. While different public welfare state and financial institutions (banks, capital markets) have been studied across coordinated and liberal market economies, this paper adds the private insurance sector to the study of countries' security arrangements, following up on Michel Albert's classical distinction between Alpine and Maritime insurance cultures. Building on extensive new insurance data collections (1880-2017) and institutional analysis, this paper corroborates the long-run historical existence of two worlds of private insurance. Maritime countries (USA, GBR, CAN) developed much bigger life and non-life insurance earlier, with no state-associated insurance enterprises and riskier investments steered towards financial markets. Alpine insurance (AUT, DEU, CHE), by contrast, was initially smaller, with strong state involvement, a significant reinsurance tradition and relatively heavy investments in mortgages and property, due to economic and financial backwardness. We argue that the larger and more "Maritime" the insurance sector, the more it made welfare states liberal and securities markets large. Insurance is thus a hidden factor for countries' varieties of capitalism and world of welfare. The recent convergence on the Maritime model, however, implies that the riskier and risk-individualizing type of private insurance has added to privatization and securitization trends everywhere. Moderne kapitalistische Gesellschaften bedienen sich verschiedener Institutionen, um wirt-schaftliche Risiken zu managen. Während wohlfahrtsstaatliche und Finanzinstitutionen (Banken, Kapitalmärkte) in koordinierten und liberalen Marktwirtschaften bereits hinrei-chend untersucht wurden, wird in diesem Beitrag der private Versicherungssektor in die Untersuchung der Sicherheitsarrangements der Länder einbezogen, aufbauend auf Michel Alberts klassischer Unterscheidung alpiner und maritimer Versicherungskulturen. Mit einer neuen Sammlung von Versicherungsdaten (1880-2017) und einer institutionellen Analyse bestätigt dieses Papier die langfristige historische Existenz zweier Welten privater Versiche-rung. Die maritimen Länder (USA, GBR, CAN) entwickelten früher viel größere und weni-ger staatsregulierte Lebens-und Schadensversicherungen mit risikoreicheren Investitionen, die auf die Finanzmärkte gelenkt wurden. Die alpine Versicherung (AUT, DEU, CHE) war dagegen anfangs kleiner, mit einer ausgeprägten staatlichen Beteiligung, einer bedeutenden Rückversicherungstradition und relativ hohen Investitionen in Hypotheken und Immobi-lien, was auf die wirtschaftliche und finanzielle Rückständigkeit zurückzuführen ist. Wir argumentieren, dass je größer und "maritimer" der Versicherungssektor war, desto mehr hat er die Wohlfahrtsstaaten liberalisiert und die Wertpapiermärkte vergrößert. Das Versi-cherungswesen ist somit ein versteckter Faktor für die verschiedenen Kapitalismusformen und Wohlfahrtssysteme der Länder. Die jüngste Konvergenz hin zum maritimen Modell bedeutet jedoch, dass die risikoreichere und risikoindividualisierende Art der privaten Ver-sicherung überall zu Privatisierungs-und Verbriefungstendenzen beigetragen hat.
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The Wawanesa Mutual Insurance Company, successful in western Canada, struggled to replicate its business model in Quebec in the 1930s. The absence of financial responsibility law in Quebec, which made purchasing automobile insurance nearly compulsory for drivers, created a unique opportunity. Wawanesa could insure taxis and fleets in a market where uninsured drivers were the norm. To accommodate this change, it became a direct writer in Quebec. The company also loosened its previously rigid management style to allow branch managers to make regionally appropriate decisions. Insurance companies that fled Quebec in the 1940s would struggle to compete upon their return, because Wawanesa became a market leader. The introduction of financial responsibility law in the province in 1961 would grow the company in the years that followed. As historians work to understand the importance of regional and legislative change to the insurance industry, this story provides a snapshot of a single company in a single market.
Recent research in economic history has found that mortgage debt in relation to GDP has taken off in the historical long run (“great mortgaging”), as growing banking assets have been redirected into mortgage credit. This paper maps the parallel long-run investment history of private (life) insurance as much overlooked second pillar of the financial system. Drawing on in-depth studies of the US and Germany, it finds that a “great de-mortgaging” took place in insurers’ portfolios, with mortgages falling from up to 90 percent in the 19th century to below 5 percent today in favor of fixed-income securities. A parallel shift to secondary mortgage bonds has hardly offset this decline, while direct real estate remained largely a residual investment class. Banks’ great mortgaging is thus partly an institutional substitution effect. The paper sees insurers’ asset shift itself as mainly driven by long-run changes in capital demand and competition with banks and pension funds. It extends these findings to other long-term institutional investors and other OECD countries in the historical long run.
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