The Values of Insurance

The Values of Insurance FRANÇOIS EWALD TRANSLATED BY SHANA COOPERSTEIN AND BENJAMIN J. YOUNG The history of insurance tells the story of modern morality, more precisely of modern struggles within the sphere of morality. Thus it would be incorrect to assume that insurance was borne of only a hypothetical need for security. The writings of Jean Halpérin have clearly shown that, for insurance to exist, a new need for security had to appear. Insurance is the offspring of capital. This new form of security was not needed in a feudal economy, in which property was tied to the land, and the individual was enclosed within the bonds of family and religion, or within corporate solidarity. Security becomes necessary, however, as soon as financial assets begin to circulate, become tradable, and capital finds itself exposed to the dangers engen- dered by this circulation. It is no coincidence that the first kind of insurance was maritime: “The sea alone was able to elude rigid feudal armature. The cornerstone of the feudal world was essentially the land; the sea escapes social and political hierar- chies; it is not subject to any governmental authority whatso- ever. Nothing is less feudal than the sea.”1 Insurance as a method for securing capital also was born as a means to circumvent the church’s prohibition against usury. “Insurance was born from the simultaneous struggle against maritime insecurity and against canon laws with regard to finance.” Also, as noted by Halpérin, the origin of insurance is not to be found in the older forms of “common security” [sécu- rité solidaire]; “When insurance appeared for the first time as an autonomous social institution, it was not founded on a sense of solidarity, but rather in the spirit of financial gain.”2 The spread of insurance goes hand in hand with the disman- tling of feudal solidarity and the freeing and autonomy of the individual. Insurance is a security measure linked to individ- ualism. It is the offspring of a capitalist ethos that has been well described by writers such as Werner Sombart and Max Weber. Neither of these authors explicitly took up the theme of insurance in their writing. But texts such as The Quintessence of Capitalism and The Protestant Ethic and the Spirit of Capitalism give the historical background that allows us to understand the moral context in which insurance was called into play.3 When Sombart describes the origin of an entrepreneurial spirit in practices such as speculation and project development [fabrique de projets], we are right to wonder whether “the insurance business” is a pleonasm. When Max Weber describes capitalist rationality, arguing that the spirit of capitalism is characterized by the fact that this rationality became a form of morality, we wonder what better example there could be than insurance. The creation of life insurance in the eighteenth 120 https://doi.org/10.1162/grey_a_00266 Downloaded from http://www.mitpressjournals.org/doi/pdf/10.1162/grey_a_00266 by guest on 01 October 2021 century was part of a movement for moral reform that made foresight the cardinal virtue of man as social actor: foresight as the quintessential social institution. The first insurance companies insisted that there should be a proportional relationship between premium and risk (which excluded the idea of social transfers [transferts sociaux, or payments made to protect indi- viduals against certain risks]). This is the golden rule of insurance. It is due less to the demands of actuarial technique than to the particular political-moral imaginary in which insurance orig- inated, an imaginary at the root of the first forms of insurance. From the Forbidden to the Obligatory Today, insurance stands as a pillar of our economic and social order and lawmakers continually expand insurance require- ments. So it is hard to imagine that, in the beginning of the nineteenth century, all forms of insurance (with the exception of maritime insurance) were treated with suspicion; life and liability insurance were prohibited as antithetical to public order and good morals. And if fire insurance was recognized, it was uniquely under the form of mutual insurance, which would prevent abuses of the system by requiring those policy- holders to engage in mutual monitoring. Insurance was, at first, accused of allowing the insured to loosen their oversight of their own affairs, to the point where it encouraged delinquency. Insurance encourages crime. It seems that this adage dates back to the first iterations of life insurance that were based on a system of bets and wagers made on the lives of others. It was indeed an invitation to make whoever has been “insured” disappear. As recounted in Louis-Augustin Boiteux’s La fortune de mer [Maritime fortunes], bets were placed on whether the emperor is coming to Italy, if it will be raining on the day that the ship returns, if the queen is giving birth to a girl, if Titio is ascending to the Capital, if the duke Charles survives (. .), if Luce Gentilis’s wife—aged 32 years old and 8 months pregnant—is able to remain safe and sound, whether or not Paul of Orto will pass away a year from now, whether Andriolina of Grimaldi will die this year (. .), we even bet on the life of the pope.4 Bets could be placed on everything: on George III’s return to health, on the life of Robert Walpole, on the acquittal or convic- tion of the Duchess of Kingstown, who was accused of bigamy. Even in France people bet on the life of the Duke of Orléans, regent of France. They bet on the life span of Louis XV’s mis- tresses and how long they would remain in favor.5 These practices, which accompanied the first maritime insurance contracts, had been prohibited across Europe. In particular, such acts had been prohibited by Colbert in the Marine Ordinance of August 1681 (marine code). Nonetheless, these practices persisted. This is reflected in a policy drafted on May 21, 1813, and conserved in Lloyd’s archives. It stipulated that Grey Room 74, Winter 2019, pp. 120–145. © 2019 Grey Room, Inc. and Massachusetts Institute of Technology 121 Downloaded from http://www.mitpressjournals.org/doi/pdf/10.1162/grey_a_00266 by guest on 01 October 2021 four insurers, at a premium of three guineas for one hundred pounds, committed to pay William Barrington five hundred pounds if Napoléon Bonaparte died or was taken prisoner before June 21, 1813.6 For a long time, there were suspicions raised against life insurance contracted to the benefit of a third party, because it encourages the disappearance of the insured party. During the trial of La Pommeraye in 1864, in which a doctor had assassinated a patient whom he had insured, the public prosecutor at the Court of Cassation, Dupin, pointed out that no subsequent orders had lifted the ban imposed by Colbert. Legislation hostile to insurance was also motivated by the principled position that: “it is against public propriety and honesty to insure the life of men.”7 This is a view adopted by many authors, including Jean-Étienne-Marie Portalis, who explained that: It is undoubtedly possible to deal with uncertainties, to sell and to buy mere expectations [simples espérances]; but it is necessary that the uncertainties and the expectations at the core of the contract do not contradict either natural feelings [sentiments de la nature] or the principles of honesty. We know that there are lands where ideas about healthy morality have been so obscured and stifled by a vile spirit of commerce that they authorize insurance on the life of men. However, in France, such conventions have always been prohibited. We have proof in the Marine Ordinance of August 1681, which only renewed the previous defenses against insurance. Man is priceless; life should not be commercialized; death cannot become a matter of speculation. These kinds of wagers on the life or death of a human being are odious, and they cannot exist without danger. The greed that speculates on the number of days a citizen will live often accompanies the crime that can shorten them.8 However, good conduct is a matter of custom [bonnes moeurs sont choses de moeurs], morality is relative, and the morals of yesterday are not those of today.9 There was a morality of law, and jurists were concerned, in a somewhat abstract way, only with respect for life. But there were also economic and political advantages that could be drawn from insurance schemes. In 1787 and 1818, the State Council authorized, in spite of Colbert’s prohibition, the activities of the first life insurance companies, recalling that they first offer a means to free oneself from usury and to moralize financial investments; they “also would revive feelings of affection and reciprocal interests that will delight society and improve its strength.”10 Because, in contrast to a life annuity contract, which was authorized by the Civil Code, life insurance contracts were more worthy of protection, because the former is too often the result of selfishness and avarice, while the latter can only be born from a generosity and benevolence which 122 Grey Room 74 Downloaded from http://www.mitpressjournals.org/doi/pdf/10.1162/grey_a_00266 by guest on 01 October 2021 brings the subscriber to impose on himself yearly sacri- fices to provide the objects of his affection the well-being and comfort that his death could deprive them of.11 Life insurance contracts were wed to the most tender of famil- ial sentiments, and gave voice to the most respectable virtues of sociability. The fact that life insurance “became the strongest antidote against selfishness” gave it an air of nobility [des lettres de noblesse].12 Morality, if one could call it that, changed registers.

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