Insurance Nation
Rebecca Zorach
During a recent week of orange alerts and duct tape mania, I chanced to look at the online edition of a major paper for news of the situation regarding Iraq. As the story loaded onto my browser, a rather unwelcome ad for life insurance popped up on my screen. ''What would happen to your family, if you died? No one wants to think about it, but the truth is that it can happen. The important thing is that you plan ahead to protect your family's future.''
At a time when fear is widely used to mobilize political sentiment (and consumer activity), it's not surprising that insurance companies would be aggressively selling their policies by exploiting our frazzled nerves. After all, the industry has its own terror-related losses to recover from: Insurance payments for 9/11, estimated at $40 billion, represent the largest payout in history for any single disaster. Meanwhile, companies are scrambling to develop and acquire their own terrorism risk models, such as those marketed by Boston-based AIR Worldwide Corporation, a specialist in ''catastrophe modeling and weather risk management.'' We can now expect individual, as well as commercial insurance rates to take into account potential losses due to terrorist attacks and other ''extreme events.''
Insurance is supposed to be dull, as typified by the drab actuary played by Jack Nicholson in the recent film ''About Schmidt.'' Schmidt's dullness translates into trustworthiness and security, the mantra of most of today's insurance ads. These ads may be gentle and soothing, but at bottom they play to our longing for safety in a dangerous world as surely as the most brazen scare ads do. This raises a question: Does our insurance culture have to make us feel nervous before it can make us feel secure?
Insurance is certainly big business, one of the biggest. In 1999, Americans spent just under $900 billion in gross premiums for coverage including health, life, and property-casualty insurance-which is more than they spent on food. While the United States accounts for about 25 percent of the world economy, our premiums make up 35 percent of worldwide insurance volume. The Land of the Free, beacon of capitalism, and encourager of all manner of risk-taking, spends much more to protect itself against disaster than any other nation on earth.
There's nothing inevitable about our insurance culture. Most historians argue that the development of insurance, life insurance in particular, required the spread of a modern scientific worldview in which basic facts about human life could be identified and subjected to mathematical analysis. Other forms of insurance, such as cargo insurance for early maritime trade, existed well before the Renaissance. But until at least the 19th century, when life insurance was finally legalized in France, it was thought that to speculate financially on the ''outcomes'' of human lives was to meddle in God's knowledge and divine plan. Even in the United States, where it was legal from the start, life insurance didn't catch on until late in the 1800s.
But from the start, insurance was intertwined with what we now consider less ''rational'' kinds of behavior. In his book ''Betting on Lives: The Culture of Life Insurance in England, 1695-1775,'' Geoffrey Clark argues that in the colorful world of the coffeehouses of early modern England, only a fine line separated insurance from gambling. Over cups of strong brew, men would bet on whose father would die first, whose wife would miscarry, the outcomes of war or travel, and even the anatomical sex of the celebrated transgendered French aristocrat, the Chevalier d'on. In this milieu, the kind of ''betting on lives'' that amounted to early life insurance was barely distinguishable from other kinds of wagering.
Organizations offering primitive forms of life insurance ranged from amicable societies to out-and-out swindlers peddling contracts whose terms bore little resemblance to a modern policy. Frequently, thanks to faulty calculations, placing money in insurance contracts did amount to a game of chance: The widows of men who died early received the promised benefits, but for those who came to collect later there was nothing left in the pot. As Clark notes, the popularity of insurance far outpaced its useful applications: In the 18th century, one enterprising patent-medicine salesman offered ''Dr. White's Venereal Insurance,'' a questionable cure for the pox that latched onto the trendiness of insurance as a marketing ploy.
Only in the 19th century did actuaries begin to transform personal perils into mathematical ''risks'' whose probability could be calculated in comprehensive ways. As a result, insurers were able to distribute the financial impact of unexpected losses across populations. In the 20th century, the burgeoning insurance industry provided a crucial early market for computers, and-as MIT management professor JoAnne Yates has shown-the actuary's needs shaped the kinds of calculations and data-storage operations that the machines could perform. Franois Ewald, a disciple of the French theorist Michel Foucault and holder of the insurance chair at the French National University of the Arts and Professions, argues that we have now entered the era of the ''insurance state,'' in which the energies of the state are substantially devoted, whether directly or indirectly, to managing risks of all kinds.
Many scholars point to ways in which insurance blurs the line between government and the private sector. While the industry itself is private, it is highly regulated. It also benefits from laws that require some kinds of coverage-car insurance is the most obvious example. In the United States, private insurers work closely with the government to provide a version of the social-democratic safety net, at least for those who can afford to buy insurance. While the system demands that we take responsibility for ourselves by paying premiums and deductibles, it also forces us to make some indirect contributions to ''the common good.'' In addition to creating investment capital, our premiums help compensate others for losses and, through the industry's heavy investment in bonds, help finance the government.
But what about the way insurance encourages contributions to the common bad? Along with anxiety (and litigiousness), one concrete consequence of our peculiar insurance culture is fraud. Insurance fraud, staple of mystery plots and classic noir films like ''Double Indemnity,'' accounts for more than 10 percent of what we pay in premiums. According to the Insurance Information Institute, yearly losses to fraud in all types of insurance may total as much as $120 billion-three times the industry's post-9/11 payout.
Insurance companies refer to fraud as a ''moral hazard''-an added risk created by the very fact of insuring against other risks. Overt swindling is just a part of this. In her book ''Reactive Risk and Rational Action,'' Northwestern sociology professor Carol Heimer discusses the related phenomenon of ''morale hazard''-incentives to negligence that may affect our behavior without our even realizing it. After all, if we weren't insured, would we be so sanguine about bombing down the ski slopes or cutting someone off on the highway? Might the simple fact of having insurance itself create new dangers?
These days, insurance is so ubiquitous that it can come as a surprise that people once needed hard persuading that buying it was a good idea. But they did need convincing, and insurers often found fear to be an effective sales pitch.
Around the turn of the century, magic-lantern slides advertising homeowner's insurance showed homes carried off by tornadoes and flood. Insurance companies used to distribute a vast array of promotional objects carrying reminders of the fragility of life. One early 20th-century pocket mirror from the Security Life Insurance Company of America pictures a mother and child on its reverse with the question, ''If the man on the other side should die, would his family be provided for?'' The message harks back to much earlier ''memento mori'' and ''ars moriendi'' images that taught medieval and early modern Christians to prepare themselves properly for death. These images often showed an image of a death's head reflected back to the viewer in a mirror.
In the mid-20th century, ads often featured wild animals and frontier scenes that suggested both the heroism that the Organization Man found lacking in his job and the widow-making dangers outside the office door. Mutual of Omaha thought it made good business sense to sponsor ''Wild Kingdom,'' the television program about a natural world full of dangers from which viewers were nonetheless protected. In the 1998 film ''The Truman Show,'' Jim Carrey's Truman (himself an insurance agent) is scared out of planning a vacation by posters with slogans like ''Travelers Beware! Have you bought enough travel insurance to protect against TERRORISTS DISEASE WILD ANIMALS STREET GANGS.'' Perhaps the satire isn't too far from the mark.
Insurers also provided helpful health advice warning parents of diseases and vices children might fall prey to. An early 20th-century Metropolitan Life pamphlet detailed the warning signs of diseased tonsils and adenoids (including such symptoms as ''Stupid Children'') and urged parents to have them removed. Aetna produced newsreel-style films like the wartime ''As the Twig is Bent,'' on causes of juvenile delinquency.
But while industry literature painstakingly itemizes our fears, they don't really want us to be hysterically fearful, do they? After all, if we think the apocalypse is nigh, is there really any reason to pay those premiums?
The German sociologist Ulrich Beck argues, in the 1992 book ''Risk Society,'' that the elaborate systems and vocabularies of managing risk set up by postindustrial states are being undermined by the sheer vastness of the potential for apocalypse that these same states have created: nuclear war, terrorist attacks, and man-made ecological disaster. Such catastrophic events go well beyond the capacity of government or private industry to ''cover'' the ''losses'' incurred. According to Beck, they threaten the language we use to cope with such losses. The very idea of insuring against, say, a nuclear war seems intrinsically absurd.
Here, as in so many things, Hollywood may have the last word. Recent films involving insurance have tended toward the surreal, the absurd, and the Kafkaesque. (Kafka, remember, worked for an insurance company.) From ''The Truman Show'' to ''Fight Club'' (about a car insurance bean-counter whose own apartment blows up) to ''Memento'' (about an amnesiac insurance investigator looking into his wife's death), these films offer landscapes of ticky-tacky suburbia or urban meltdown and a bleak view of family life. For the solitary insurance industry antihero, time has no meaning, the outcome is inevitable, and life exists only to be televised, recorded, and quantified.
In the Coen Brothers' 1991 film ''Barton Fink,'' John Goodman plays a satanic insurance salesman holed up down the hall from a frustrated screenwriter in a fleabag hotel in 1940s Los Angeles. In one deranged monologue, this anti-Schmidt implies that when it comes to insurance, the line between clear-eyed rationality and paranoid fear may be hard to draw:
''Well, Barton, you might say I sell peace of mind. Insurance is my game, door-to-door, human contact, still the only way to move the merchandise.... I'm pretty good at it.... Hell, yes, because I believe in it! Fire, theft, and casualty are not things that only happen to other people!''
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