Why do people buy insurance, and what does it mean to them? We spoke with Associate Professor Erik Bähre about his project researching insurance in Brazil, Italy, India, the Netherlands, South Africa and the USA.
You have been researching insurance for more than 10 years now. What is your focus, and what got you interested in this topic?
Insurance is a great human invention made possible with actuarial science. It helps people to overcome adversities in their life in ways and on a scale that has important consequences for society. Without insurance, one always has to depend on people you know and with whom you have a personal relation or affiliation. But because of insurance we can mitigate risks and uncertainties on a much bigger level.
At the same time, these financial products also create risks. We saw that with the global financial crisis of 2007 but I also see that in my fieldwork. A consequence of insurance is that social support networks among neighbours and business owners change.
In South Africa financial products contributed to violence in the taxi industry. Insurance, but also credit facilities, turned the leaders of taxi associations into powerful brokers between the financial sector and taxi owners and this led to all kinds of violent conflicts. So here we see an example of how insurance not only helps people to overcome adversities, but also creates adversities. I think it is very important to understand these dynamics as we increasingly depend on financial products.
Your ERC Consolidator Grant allows you & your team to investigate these issues in six countries: Brazil, Italy, India, the Netherlands, South Africa and the USA. Why did you choose these countries? What similarities and differences are you finding in each location?
All these countries have well-developed financial infrastructure and I felt it was important to include countries in the Global South and the Global North. Too often, it is assumed that the Global North is more advanced when it comes to financial products and that the Global South is following in the footsteps of, for example, the United States.
But this is not always the case. These countries have their own dynamics and we need to understand this diversity. One of the key questions of the project regards the national political context in which insurance markets develop. The free market does not exist in real life, it only exists as a myth, something we can imagine. But the notion of the free market is a very powerful imagination. By including these countries we can better understand the relation between markets and politics.
How do political agendas shape financial markets and financial products? In India, for example, there is a concern about farmer suicide and insurance is seen as a way to prevent this. In the United States, South Africa, and Brazil racial inequalities are important in shaping the insurance market. It raises questions about the extent in which financial inclusion can help to overcome these inequalities or end up deepening them.
Technology is playing an increasing role in the sale and delivery of insurance products. Do you think this is affecting how consumers engage with insurance?
Oh yes, very much so. The project has just started but we already see this. Technology can make insurance cheaper and more affordable, and can contribute to financial inclusion. But financial inclusion raises moral concerns and we want to understand these. How do people feel about safeguarding their privacy, for example when technology makes it possible to track people’s behaviour? What happens to people who do not have the skills to work with these technologies?
Technologies create new uncertainties and we examine how people experience the introduction of these technologies. A clear example is the black box in Italy. The box tracks how people drive and if you have it installed in your car you can get a discount on car insurance. How do people experience this?
In the Netherlands, technologies like social media offer new ways to complain about insurance. Clients not only share bad experiences with family and friends but also share them via websites, twitter, Facebook. This offers an alternative to the formal complaint procedures that also exist and changes the insurance market. How do people use these technologies?
Finally, what can the rest of us take away from your findings? And what direction do you hope to take this research in the future?
Today, most people cannot do without financial products. In many parts of the world, financial products are an essential part of everyday life. We want to understand how financial products change people’s lives but also how they change societies over time.
The methods that we use are only recently used to study financial products. We do ethnographic research, analyse people’s stories and experiences, do participant observation on specific events and examine insurance related cases in great detail.
By acquiring such a detailed understanding of how financial products feature in people’s everyday life we can go further than claiming that finance is bad or good, or other universal claims that are not empirically founded. Instead, we can develop a much more nuanced understanding of these dynamics.
This is very important because finance is at the heart of many challenges that were are facing today, ranging from questions regarding sustainability to concerns about global inequalities. I am convinced that we can only deal with these issues by developing a new language that helps us to think and talk about problems and solutions in a new way.
Dr. Erik Bähre is Associate Professor at the Institute of Cultural Anthropology and Development Sociology of Leiden University. His project Moralizing Misfortune: A Comparative Anthropology of Commercial Insurance, explores the moral issues that insurance generates in Brazil, Italy, India, The Netherlands, South Africa and the USA.