Private spanner in public works? The corrosive effects of private insurance on public life

Abstract

Contemporary societies are not only “risk societies”, but also insurance societies. While the shift of systemic risks from the community to the individual is a distinctive trait of modernity, research on the consequences of this process has focused almost exclusively on welfare state responses aimed at re‐collectivizing societal risks. Individual‐level reactions associated with the need for a private safety net against the uncertainty brought by risk societies have been largely overlooked. What happens to a society and its individuals when private insurance becomes commonplace? Focusing on Germany, we use the data of the German Socio‐Economic Panel (1984–2018) to investigate the attitudinal antecedents and consequences of contracting private insurance. As one of the most important sources of private welfare, life insurance attracts risk‐averse individuals who are highly concerned with public economic affairs and see the market‐based solutions of conservative parties as the best way to safeguard their economic security. While short‐term attitudinal effects are absent, a longitudinal approach reveals that becoming insured gradually increases economic security but also entails withdrawal from public life and aversion to parties that support social redistribution. The loss of dynamism of a society may thus be related not only to public welfare but also to a private institution at the heart of the financial markets, which moreover has privatizing, welfare‐eroding effects. The paper argues for a more general sociology of insurance.

Private Insurance, Public Welfare, and Financial Markets: Alpine and Maritime Countries in Comparative-Historical Perspective

“…Busemeyer and Iversen, for instance, show that the increased availability of private insurance alternatives "undermines support for universalistic public provision of social insurance among the middle and upper income classes," 94 a finding confirmed with longitudinal data in Germany. 95 To substantiate these claims about the association between private insurance and the welfare state, we additionally ran two regressions: one first-difference ordinary least squares (OLS) regression of the size of private insurance (premiums per GDP) on the size of the welfare state (social expenditure per GDP) in column 1 of Table 2 and a Cox-hazard model on the post-1880 risk to introduce average social security legislation in column 2. We also add the interaction with Maritime (vs. Alpine) insurance countries, where we include Australia, New Zealand, and Italy, respectively, to achieve more statistical power.…”