SESSION 21. Markets created, regulated and destroyed by the State: State action as a driver of private insurance enterprise 1850-1950

21. Markets created, regulated and destroyed by the State: State action as a driver of private insurance enterprise 1850-1950.

Christofer Stadlin (Zurich Insurance Company). christofer.stadlin@zurich.com
Luca Froelicher (Federal Institute of Technology).


“The business is entirely a creation of law.” That’s how W.A. Dinsdale, in his 1954 History of Accident Insurance in Great Britain, dryly defines the primary feature of interest in the history of employers liability insurance. The law creating this opportunity for private business enterprise was the Employers’ Liability Act of 1880, imposing a liability on employers for accidents to their employees, which did not previously exist. Similar legislation was introduced in various European countries in the second half of the 19th century most notably in Germany but also in Switzerland and France. Everywhere with the same effects: 1. the foundation of private companies offering liability insurance and workmen’ compensation, the other mayor line of business involved; 2. the expansion of existing companies across borders. Even though the market fundamentalist brand of neoliberalism is in retreat, the idea, that it is best for private enterprise and therefore economies if states leave maximum space for individual initiative and interfere as little as possible in private business activity, is still a very forceful underlying assumption lingering around business sciences. The main problem this idea poses for business history and the history of the private insurance in specific lies therein, that it obstructs the view on the very dynamic interdependences between state action, markets and private enterprise, the transformational impact this interdependence had on business enterprises on the one hand and states and state organizations on the other. This interdependence is especially obvious in the history of insurance business.

Session objectives:

The session wants to contribute to a dynamic understanding of the relation between capitalism and state power by looking at the specific history of private liability, collective accident insurance and any other types of insurance similarly dependent on state legislation. It invites papers on the history of such types of insurance, and the history of companies, which underwrote them, but also on the larger socio-political contexts and legal frameworks wherein this took place. Histories about how these companies thrived and throttled on legislative action, creating, regulating and destroying demand for the insurance, they offered, but also how the relevant concepts and political discourses developed and influenced the business.

Three thematic complexes of this interdependence are of special interest in the history of casualty insurance. The elements making them up could therefore also be themselves subjects of research papers, which the session would be happy to accept:

  1. Creating demand.
  2. The development of the concept of liability in the 19th century and national differences.
  3. Liability as a tool of liberal welfare policy, Manchester liberalism’s answer to the social question.
  4. Liability as insurable risk and the problems of negligence and moral hazard.
  5. Insurance funds as means to national financial development.
  6. National legislative projects and initiatives creating opportunity. For private (casualty) insurance, the specific political developments. And the socio-political processes making up the contexts of such. Legislation, national differences and similarities.
  7. Private insurance companies taking on the opportunity; the concrete liability, collective accident or other insurance covers they offered; the development of the companies over time, and how state action changed them as organizations.
  8. Regulating supply. The business model of insurance, selling the promise of future compensation, in case of specific occurrences, is especially prone to abuse and outright fraud. Accordingly, state regulation set in early on, mostly triggered by bankruptcies in the last quarter of the 19th century, which left customers without cover. Maybe the most important area of control was the solvency of insurance companies to guarantee that they could fulfil their obligations to their customers. Second came the control of the actual covers sold to make sure that they really covered the involved risk and were not to the disadvantage of the insured. Of main interest are specific regulations on liability and collective accident insurance. The impact they had on respective insurance companies, and the possible dynamics this triggered. In Switzerland, for example insurance supervision was created in 1886 and interestingly became a marketing argument for Swiss casualty insurance companies especially in foreign markets where regulation was not yet established.
  9. Destroying demand. Germany had been the first European country that introduced business creating liability laws but also became the first country to nationalize collective accident insurance already in 1886. In Switzerland the political discussions about nationalizing workmen’s compensation started in the 1890s, a first vote in 1900 was negative but a second one in 1912 positive and the state monopoly insurance started in 1918. The UK and France followed in 1946 and nationalized workmen’s compensation too. These state interventions made the private casualty insurers lose significant portions of their collective liability business. Especially hard hit were their sales organizations, who lived mostly on commissions. They needed something to substitute for the loss. Existing evidence indicates that the substitute primarily came from other casualty lines mostly private and motor liability. This was facilitated by the fact, that the concept of liability had become commonplace in western societies by the first half of the 20th century.