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Research Projects

Insuring modern societies: A historical-comparative sociology of private insurance, its evolution, origins and consequences

Sebastian Kohl

Funded by the Deutsche Forschungsgemeinschaft/ German Research Foundation (project number: 521230583)

This project proposes a historical-comparative sociology of the private insurance sector in its life and non-life branches (property, transport, etc.) in 20 old OECD countries starting in the late 19th century and 15 emerging economies with shorter coverage (Latin America, Asia, Eastern Europe). The insurance sector annually collects about 7% of world GDP as premium income, holds about half of total banking assets and becomes increasingly important in times of rising climate and catastrophe risks. This has strangely been neglected by either historians and economists of finance, with their focus on banks and capital markets, or political scientists, with their strong focus on public insurances within the welfare states. Sociologists themselves have covered “risk sociology” very well, but largely ignored the insurance sector therein. This project aims at filling this gap by building a cross-country historical database of the main stock and flow variables of modern premium-based insurances in order to study their evolution across time and countries, to explain their growth and to investigate selected consequences in three working packages. The first working package will build the insurance database and describe the about 200 years of modern insurance development and will compare its growth trends with those of other financial institutions and the public welfare state. It will also uncover countries’ different insurance growth trajectories. The second working package addresses the question of different growth determinants by mainly looking at often discussed economic and cultural factors, i.e. the relationship between economic development and insurance growth and the potentially Weberian relationship between Protestantism and different denominations and insurance development. A final working package focuses on selected consequences of insurances: does the sector macroeconomically insure against financial and other crises by allowing for quicker economic recoveries? Is there a trade-off between private insurers and public insurance domains, particularly in the pension and accident domain? Overall, the project connects to some questions studied across different disciplines for very short time spans, but plays out a huge data advantage of covering many countries in the long-run. Beyond building a future database for practical use in welfare, finance and securities studies, the project contributes to a potential sociology insurance that connects to Weberian themes of rationalization, to the different worlds of public welfare and the varieties of capitalism.

Housing shortage in Germany

Sebastian Kohl
Max Steinhardt
Luca Stella

Funded by Hans Böckler Foundation

A central but under-researched dimension of the New Housing Question is the inadequate supply of housing space to households. After decades of continuous growth in living space per household and person in western Germany, and from the 1990s also in eastern Germany, urban and especially tenant households have been reacting to price and rent inflation for the first time in recent years with a sharp decline in demand for living space. This trend is also documented by rising overcrowding rates in European countries. 10% of German households (and even 20% of young households) had less than one room per adult person available in 2020 (overcrowding). Housing supply and overcrowding are strongly income-related in society, with a Gini coefficient of about 20% in Germany, according to data from the Socio-Economic Panel (SOEP) (Kohl et al. 2019). While unequal consumption need not be problematic per se, it has a number of socially undesirable consequences, particularly in the case of overcrowding. Our project focuses on families who face the trilemma of balancing family, school and work when it comes to housing. The existing literature shows a strong correlation of overcrowding with psychological stress, family instability, and low academic performance. This has become extremely evident in the Corona-related retreat to the home office and home schooling.
Housing shortages thus have negative spillover effects on a number of domains of life, which this project aims to explore for the first time using causal methodology as well as in the context of the Corona pandemic for Germany. Adequate housing is not only a key factor in the reproduction and allocation of labor, but is also an increasingly important aspect of the welfare state. Thus, the housing issue has been repeatedly referred to as "the social issue of our time" in recent years.

In Application: Reinsuring Catastrophe: The Business and Politics of Reinsurers in Times of Climate Change and Financialization

Reinsurers insure direct insurers against excess losses by diversifying risks across the globe and thus spreading direct non-life and life insurance. Recently, this economic background function has come to the fore of media attention as the rise in reinsurance premiums and even retreat from markets too exposed to climate change has made entire areas and branches uninsurable. Due to their global focus on excess losses, reinsurers have been in a unique position to document and be subjected to climate catastrophes, while they themselves have become increasingly intertwined with capital markets through catastrophe bonds and financial investments. This project aims to uncover the often-hidden financial giants in the reinsurance sector to understand how they reacted to climate change and ongoing processes of financialization. In a first working package, it therefore proposes to build a new database from reinsurance supervision authorities and public reporting to uncover and quantitatively describe the main long-run international trends of the reinsurance sector, covering the main dimensions of reinsurers operating business, financial investments and public stock performance in light of increasing catastrophic losses. This will lay the groundwork for a more qualitative understanding of how reinsurers reacted to climate change and financialization pressures. Working packages 2 and 3 then zoom in on the internal processes of the two biggest world reinsurers, Swiss and Munich Re, through interviews, archival work and process tracing, to understand how these actors have coped with climate change and financialization. Working package 2 will analyze how the firms came across climate-related anomalies starting in the 1970s, built internal risk units and – unlike the oil industry – soon went public with their findings from loss statistics. It will ask how firms reacted epistemically but also in business terms to these findings. Working package 3, in turn, will look at the parallel process of financialization: how did the ‘big two’ become increasingly reliant on catastrophe bonds sold on financial markets and on investment revenue to bail out catastrophe losses? How have they themselves tried to extend financial markets through backing micro-insurances against climate risks in countries in the Global South? Overall, the project looks to contribute to debates in the sociology of finance (and insurance), to business-power approaches and climate sociology, which all have tended to ignore the large reinsurance sector.

Ongoing reseach projects include:

• Varieties of institutional investors: what is the role of institutional investors in financial capitalism and why do they differ so much across capitalist economies?
• Housing shortages: what are the causes and consequences of inequalities in residential floor areas?
• Insuring capitalism: what is the historical evolution of private insurance, why has it differed across the Maritime vs. Alpine economies and what are the consequences of different insurance cultures?
• Are there trade-offs between the public welfare state and private modes of welfare provision (insurance, homeownership)?
• Financial capitalism: why are financial institutions governing private wealth so different across countries and time? What are the micro-effects of different private household wealth compositions?
• Social housing: why was Red Vienna possible (and not elsewhere)? What is the long-run evolution of social housing rates nationally?
• The Financialization of Rental Housing: A Historical-Comparative Global Study (Rubicon Fellowship: Bo Li)
• From “New Theoretical Movement” to “Cultural Sociology”: Jeffrey Alexander and the Recent Changes in Sociological Discourse (DFG Walter Benjamin-Stelle: Jayme Gomes)