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Private Insurance, Public Power: A Symposium


Kate Yoon (@accidentallyk8) is a recent graduate of Yale Law School and editor at the LPE Blog.

This post introduces a symposium on the law and political economy of insurance. Read the rest of the posts here.

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Earlier this week, the cargo ship that crashed into Baltimore’s Francis Scott Key Bridge was removed from the site of the collapse, clearing the way for the Port to re-open its main channel later this month. From a legal perspective, however, the long saga of the bridge collapse has only just begun. The insurer of the bridge itself is reportedly about to pay $350 million to the state of Maryland, an amount that still pales in comparison to the expected price tag of reconstruction. Additional claims by impacted parties—for example, other cargo ships that have not been able to pass through the closed port—might amount to billions of dollars. These insurance disputes are expected to go on for several years, exposing a complicated web of insurers, reinsurers, and lawyers spanning continents.

Elsewhere this spring, homeowners in certain parts of Florida and California have been hit with skyrocketing premiums, if they have been able to find coverage at all, as private insurers withdraw from the regions in response to increased climate risk. Some have suggested, however, that the worst is yet to come, and that climate risks still haven’t been fully reflected in the insurance premiums of single-family developments in coastal areas.

As both of these developments reveal, private insurers exert significant influence over how we build in the face of catastrophe. Yet such influence is hardly limited to construction. From the health care we receive to the public services our cities provide, private insurers play a considerable yet often overlooked role in our political economy. And insurance markets, of course, do not arise naturally or spontaneously, but are instead the product specific social and legal conditions. The law enables insurers to take on this outsized role by carving out antitrust exceptions for the insurance industry, by allowing insurance industry lobbyists to influence political decisionmaking, and by making possible the financial instruments that profit from risky development.   

We are, then, long overdue to examine the sweet actuarial science and its industries from a law and political economy perspective. Over the next few weeks, authors in this symposium will examine the role insurance plays in areas of social and political life ranging from policing to real estate to economic inclusion. Across these disparate domains, these posts will highlight a number of common themes.

First, insulation (or insurance) from risk is differentially available to different groups of people. Many scholars have documented the long history of racial and gender-based discrimination in insurance, as well as the correspondingly long history of resistance to it. Even today, large gaps in coverage persist based on race, with Black people being denied coverage much more frequently than white people, and paying much higher premiums when they do get access.

Access to insurance is, moreover, often determined based highly imperfect proxies: individuals may not be able to buy auto or home insurance because of their zip codes or credit scores, even when there is little discernible relationship between credit score and, say, driving risk. An LPE approach to insurance asks questions such as: what does the distinction between permissible and impermissible proxies show about the prevailing moral economy? How do seemingly neutral classifications (such as credit score) actually reveal the interaction between race, gender, and class?

Second, risk is politically constructed. Insurers and governments make choices about what risks are tolerable and what risks are not, as well as who bears responsibility for risk. Indeed, insurance can even serve the role of obscuring political decisions behind the seeming objectivity of actuarial logic, re-directing public blame to individuals who make “bad choices.” Instead of an anti-discrimination approach that simply demands, say, equal premiums for equal “risk,” an LPE approach to insurance asks how risk itself is made legible. For example, what are the underlying, political-economy causes of public health crises that lead some people to be more insurable than others? What role does the government play in subsidizing certain forms of risk (such as real estate development in coastal areas) but not others?

Third, insurers have a lot of power: not only are they responsible for making decisions about what is risky and who deserves protection from risk, but they also have access to an increasing amount of information about ordinary people’s behaviors. Consider insurers’ attempts to monitor driving behavior, track individual physical activity, or even gain access to genetic test results to gather information and classify people according to risk. In that way, insurance is biopolitical, creating subjects and disciplining behavior. How might law serve to expose, or alternatively protect, us from these invasive forms of surveillance?

Through this symposium, we hope to start a broader conversation about the law and political economy of risk and insurance, and look forward to exploring the different ways in which private insurance wields public power.